A sudden slip into Alert Level Three, the blast of the emergency ‘COVID’ warning through our phones and once again we’re into the balancing act of keeping our businesses moving in exceptional circumstances.
Last month our Pulse Check results told us how adaptable and flexible New Zealand’s small business are, with business owners altering operations and changing practice in order to survive the challenges that 2020 has thrown at us all. Just as we have rolled out our August Pulse Check – which you can access here if you would like to participate – the beat has changed again and, in Auckland, we are facing at least three days at Level 3, probably more, with the rest of New Zealand parked up at Level 2 for the time being.
We asked our Auckland team for their thoughts on the current situation and their advice was simple — we’ve been here before, rely on past experience and know that it will pass.
The Alternative Board’s managing director Stephen James said: “Knowing it will pass, spend some time addressing a few scenarios. For example, if Level 3 lasts, as announced, for three days what do you need to do? Or, if it remains in place for two weeks or if Level 4 is declared and we have full lockdown for an indefinite period — what then? Develop plans of action for each scenario and communicate these to your staff and stakeholders.”
As we move back down through the Covid-19 alert levels and more businesses commence trading, it is clear that it will not be ‘business as usual’ for most businesses for some time. There may well be a small short surge as businesses open, but at present most business owners have little confidence in predicted business and public confidence beyond that period, as the impact of restructuring and redundancies take hold.
This raises the question of what steps business owners should now be taking to assess the risk of doing business with clients going forward. It would be great to be able to tighten terms of trade and insist on higher deposits or shorter payment terms, but practically that is unlikely to work in a lot of cases.
So what can a business owner do to improve credit management processes? Here are some ideas.
1. Review and update your terms of trade to ensure they are robust enough
2. Ensure, where appropriate, that you have protection through the Personal Property Securities Register by registering your interest in the goods sold.
3. Set up a credit watch arrangement with your credit agency to ensure that any issues with major clients are advised early. This at least gives you a head start over other unsecured creditors.
4. Review your client base and determine those clients where a failure to pay two months debt would severely impact on your business viability and look at taking our debtor insurance on those clients.
5. Where practical, look for higher deposits or shorter repayment terms.
6. Do proper due diligence on new customers including credit checks. This is a time when customers may be changing suppliers because of credit issues with the current one.
Like with health and safety and employment law, it is not sensible to use the old adage: “It will never happen to me”. Over the past few years some well-known companies have fallen over and I would love to have a dollar for everyone who said to me: ‘That was a surprise”.
Well-known brands in the media at present are publicly advising of difficulties, so one would be naive to think that any company is immune from failure
Now is the time to review and improve your credit risk procedures to bring them in line with the significant improvement that has occurred with health and safety processes in recent times.
– Steve Wilkinson, TAB Business Owner, Christchurch & North Canterbury
“I felt quite lost and drowning in my weekly responsibilities, that is, until I became a member of The Alternative Board,”says Barbara Rivers, Managing Director of The Makers Atelier in Christchurch. The Makers’ are a curtain and soft furnishings manufacturer with a work space of 190 square metres and 9 staff.
Barbara finds value in being involved in The Alternative Board peer group process.
“I was in two minds as to either startup fresh or purchase a business with clients, staff and production in place. The business I purchased had a good name but was in a state of being rundown and required a lot of energy, marketing and customer relations. The latter two, marketing and customer relations, were things which I knew I was good at.”“My biggest challenge was that I was pouring money in each month to keep the business going, paying staff, working with old pricing structures, and the challenges that I had were make or break for the success of the business,” she adds.
“Working with The Alternative Board has helped me realise that these are growth stages. I have been given tips to deal with these challenges, in a controlled and practical manner.”“There’s a real respect with the other Board Members of The Alternative Board. I see results quickly after each Board Meeting because I’m empowered to do so. It has been an invaluable process for me because I felt quite lost and drowning in my week-to-week duties and responsibilities. Having the backup support of The Alternative Board has helped me to achieve and grow each month.”
Barbara has learned lessons from being a Member of The Alternative Board.
“The biggest change I have seen in me has been accepting that I am the boss and not just a co-worker. I believe that the staff are happier in their working environment now. With the help of The Alternative Board, I’ve become very clear on our business message and vision.”
Barbara’s top tip to other business owners is to work in your new business for a year before you make changes.
“Understand it and its cycles and, most importantly, ask the customers what they value before you change.”
The Alternative Board peer group process of accountability allows Barbara to ensure she keeps very clear with her business message and vision.
Most people don’t go into business to do the books, but Craig Hibbert did!
As part-owner of a retail sports store for 25 years, Craig was responsible for keeping the books, but, like a lot of small business owners, he had no idea what he was doing. Craig chose to up-skill and qualified as an Accounting Technician with the New Zealand Institute of CharteredAccountants.
Craig founded ‘Bookworks’ in 2004, motivated by the continual avalanche of client records which he’d received in shoe boxes. Craig’s forte is fixing messes in his clients’ software.
Craig finds value in being involved in The Alternative Board peer group process.
“Running your own business by yourself is lonely, having the understanding and support of the other Members has been crucial in my decisions. Sitting around the Boardroom table, with my peers, has shown me that I am not alone. I spend most of my time fixing clients’ software messes, as well as training and supporting my clients in a one-on-one situation,” he explains. “I am an Approved Trainer for MYOB, QuickBooks and Xero, and because of these accounting qualifications, I bring that extra level of knowledge and experience, filling the gap between client and accountant, because having been in both positions, I know that neither one understands the other very well.”
“I’ve learned to take more time over my decisions in order to consider all aspects. I now make the decision for myself and not the others, when it’s right for me and because it’s right for me.”
Craig attributes the success of his business to the approach of treating his clients and their businesses as though they are his own, and by doing what he says he’ll do when he says he’s going to do it. The Alternative Board peer group process allows Craig to remain true to his word by enabling him to be consistently and consciously accountable within the business world.
“I urge all small business owners to seek support and advice from others when and where you need it and, importantly, that you act upon that advice.”