April/May 2020 - BAY OF PLENTY BUSINESS NEWS

16 BAY OF PLENTY BUSINESS NEWS April/May 2020
Help at hand for small businesses
facing economic effects of Covid-19
Help is at hand for New Zealand’s more
than 480,000 small businesses grappling
with how to keep afloat during the changing
economic environment caused by the
Covid-19 pandemic.
A
newly established social
enterprise, Weather
the Storm, has been
launched by business consultant
Isis Farrelly and sales and
marketing expert Cameron
Macneil.
Their goal is simple –
to support New Zealand’s
sole-traders and small business
owners in taking immediate
action to mitigate the economic
downturn.
“These are uncertain and
challenging times, so we’re
providing advice, tools and
resources, including our soonto-be
released programme Getting
Through – a step-by step,
interactive programme you can
complete from home to assess
your current position, then develop
an action-oriented business
and financial plan to get
through,” said Farrelly.
“We’ve called upon expert
advisors across a number of
professions to assist, including
accounting, insurance, human
resources, legal, marketing and
banking.”
The programme, aptly
named “Getting Through” offers
practical tools and strategies
focused on making an
immediate difference to a
business’s cashflow and bottom
line.
Co-founder Cameron
Macneil says that when market
conditions change for the
worse, those who take swift
action and adapt don’t just
make it through, but often
prosper in the long run.
“But to come out the other
side of the kind of market
impacts that are ahead of us,
small businesses need to have
two simple priorities: be resilient
and maintain profit.”
Macneil says the Government
has come out with a
great package of measures to
support businesses in the short
term, but people shouldn’t rely
on that continuing indefinitely.
“Small businesses need
to take charge of their own
destiny and despite what it
may feel like right now,
they actually have a lot
of control over how
they come through
this,” he said.
“Often the hardest
part for small businesses
is knowing
where to start and
what can be done. The
resources provided by
Weather the Storm and
their Getting Through programme
takes a whole-ofbusiness
approach, providing
plain English, step-by-step
strategies to reduce costs and
improve profit margins in a real-world
way.”
In addition, members get
the benefit of an entire panel
of expert advisors, including
Tom Beswick of Ingham
Mora. For less than the cost
of one hour with an expert,
you gain access to advice and
strategies across the entire
range of topics covered in the
programme including cashflow
management, staff engagement,
lease negotiations,
sales generation and many
more.
Isis Farrelly
“Whatever the business,
this programme will work, and
it can be completed from the
comfort of your home and at
your own pace,” says Macneil.
Farrelly, business performance
and change management
expert, says they had an
early opportunity to test their
programme when a family
member in Whakatane found
her business in dire straits
overnight after the Whakarei
White Island tragedy and
then the emerging effects of
Covid-19.
Cameron Macneil
“By February her revenue
was down almost 50 percent
and she was on a path to
insolvency.
“Within days of completing
the programme prototype, she
had re-negotiated her lease,
reduced her operating costs,
agreed improved payment
terms with her suppliers and
restructured her team’s hours.
“These fairly straight-forward
changes meant she could
keep drawing a wage for herself
and continue making her
mortgage payments.
“Simply put, they saved her
business.”
Macneil and Farrelly say
if there’s one piece of advice
they can give small businesses,
it’s this: act now and take
control.
Getting Through is available
to any business in soletrade
or small business in New
Zealand and launches in early
April.
People wanting to find
out more or to access the
free available resources visit
https://weatherthestorm.org.nz/
Buying in uncertain times
A quote often used in relation to the stock market, is:
“Buy on the sound of cannons, sell on the sound of trumpets.”
It means that savvy investors will buy shares when things seem the
direst (when everyone is running away) – and sell when things seem
the rosiest (when your Uber driver is providing stock tips). And as it
applies to shares, it can also apply to buying businesses.
BETTER BUSINESS BUYING
> BY TOM BESWICK
Director at Ingham Mora Chartered Accountants in Tauranga, is a
business advisor who specialises in buying and selling businesses.
He can be contacted on 027-5744- 019 or tom@inghammora.co.nz
Some will now be wondering
whether to push
pause on those business
ownership dreams. However
here are a few reasons to keep
considering this – as well as a
few extra things to watch for in
the current market.
Three reasons to buy
now
It is the opportunity to be the
master of your own destiny
and not reliant on an employer.
Often a major reason
for buying a business is to be
self-reliant.
In times of uncertainty this
can be both a positive and a
negative.
If you back yourself and
find the right business, then
potentially it can be safer to
be your own boss rather than
working for someone else. It
might seem risky right now to
leave a solid job to buy a business.
However, we may soon
find that for many staying put
in employment comes with its
own risks.
There are likely to be some
good buying opportunities
around soon. A smart buyer
will take advantage right when
the cannons are loudest.
There are likely to be vendors
out there who realize
they would prefer to not hang
around unsold given the uncertainty
and that might loosen up
a few prices.
It takes guts to do it, but unless
you have the opinion that
things are going to stay down
for years, then now (or soon)
will be a great time to buy.
Staff retention is likely to
get slightly easier. People are
less likely to jump ship during
times like this – certainty of the
known outweighs any grass is
greener considerations.
In recent years we’ve had
a very tight labour market, so
retention of key staff has often
been right up there as something
to watch when buying a
business. If staff retention risk
eases this lessens the risk on
buying a business.
Three things to watch
Paying a price that is relevant
to current profits and
forecasts.
One thing a recession does is it
makes last years’ “record profits”
a lot less alluring.
Just because the business
had a great March 2020 fiscal
year doesn’t mean that 2021
will look anything like it. A
buyer needs to pay a price that
is sustainable going forward
(and for which they will be
able to get finance).
Getting the right finance is
If you back yourself and find the right business, then potentially it
can be safer to be your own boss rather than working for someone
else. It might seem risky right now to leave a solid job to buy a
business. However, we may soon find that for many staying put in
employment comes with its own risks.
key. Cashflow is going to get
harder to predict. Previously
reliable customers might become
slow payers, given their
own cash flow constraints. If
you are looking to buy a business,
you are going to need a
more robust finance package
now than you did say three
months ago.
When you are in the due
diligence phase, you should
spend more time on things like
scenario modelling where you
work out how your overdraft
is affected if say 10 percent
fewer sales are made, margins
soften five percent, and
customers pay 15 percent etc.
Doing your homework is key
to make it through to the easier
times.
Customer retention. If consumer
spending starts to decline,
then competition will increase
(particularly on price).
In my view we never really
recovered from the sale addition
that seemed to kick in
during the GFC.
Whether ever bigger ongoing
sales will have any affect
on spending remains to be
seen. Make sure you spend a
bit more time than you would
have considering the competition
and what things you can
do to ensure that you are not
relying just on price cutting to
stay in business.
Unless things are spiralling
to an end of days scenario
(surely the health impact is not
severe enough for that) there’s
no reason to hunker down and
stop buying businesses.
However, the cost of getting
it wrong grows in tough
times. Take your time to get
advice and you should buy
well, get through the next period
and be well placed to succeed
in the recovery.
A smart buyer will be well
dug in to whether the shortterm
cannon fire and will be
the one blowing their own
trumpet in years to come.