As entrepreneurs and business owners we should always be thinking of ways to make our business more resilient. Ways to diversify and to find new revenue streams. Ways to sell more to a broader mix of customers and ways to make our bottom line healthier.
Because we just don’t know what’s around the corner that could knock us completely off course – or worse.
Coronavirus/COVID-19, is clearly a case in point here. As I write, it’s wreaking havoc on businesses of all shapes and sizes in a myriad of different industries – and on society as a whole. There’s a lot of people doing it really tough right now and my heart goes out to every one of you.
But I say to all of you business owners: now is the time to stay positive, to control the controllables…and to focus on what you can do to steer your business out of this crisis – and thrive on the other side.
Because we will come out the other side.
This Coronavirus pandemic brings back memories of my first few years as a tour business owner.
I started my tour business Melbourne Private Tours at a time when global travel was still recovering from the outbreak of SARS and just a few months before the Global Financial Crisis (GFC) hit.
Then a few months later, we endured a Swine Flu Pandemic, ‘once in a generation’ bush fires in Melbourne’s surrounds, plus a US dollar that plummeted and caused American bookings (my number one visitor market and around 70% of my business) to dry up literally overnight.
It wasn’t a great time to be starting a tour business.
But on reflection, I can say hand on heart that it was the best possible initiation to ‘tour business owner’ I could have hoped for.
2008 was a tough year for my little start up. But by the middle of 2009 the story was a very different one. Our annual revenue had jumped from 65k to a little under 300k…and we were away:
The next 5 years saw an average increase of around 40% and by 2016, our annual revenue was over to $2 million. I ended up selling the business in June 2017 for 7 figures.
Why am I telling you this?
Because I can 100% pinpoint the tough times we endured through 2008 and 2009 as the turning point for my tour business.
So If I were still running that business today I definitely wouldn’t be going into my shell. I know the horizon looks pretty bleak right now – but I wouldn’t be throwing in the towel.
I’d be seeing this incredibly challenging time as my pivotal moment. A time of opportunity. A time that my business comes of age.
Because if you can use this time to make some sizeable improvements across a multitude of areas in your business…you’re going to be setting yourself up for massive success when we bounce back.
Because bouncing back is inevitable – history has shown this to be true plenty of times.
So right now, here’s 5 things I would be doing to navigate this crisis – and set myself up for success on the other side:
1. Manage and minimise any unnecessary expenses.
If you have one, pull out a copy of your most recent profit and loss statement. Go line by line through every expense – both your cost of sales and your business operating expenses…I’m talking every expense:
Advertising, Bank Fees, Bookkeeping Fees, Consulting & Accounting, Insurance,
Interest Expenses, Legal expenses, Light, Power, Heating, Merchant Fees, Parking & Tolls Registration & Insurance, Repair & Maintenance, Postage, Printing & Stationery
Realised Foreign Exchange Gains/Losses, Rent, Staff Training, Staff uniforms, Subscriptions, Superannuation, Telephone & Internet, Travel – International, Travel – National, Wages and Salaries…I’m sure you get the idea!
As you go line by line, ask yourself: What’s unnecessary? What’s essential?
Then start categorising these expenses. I recommend using these 4 categories:
Keep. Cut. Defer. Negotiate
Once you’ve done that it’s time to get to work and action each expense.
(Yup it’s going to be quite a job but I promise you it’s worth it…and, hey you’ve probably all got a bit of time on your hands now right?)
In my experience, while expenses such as payroll and rent take up a huge chunk of your monthly budget, don’t forget to pay attention to those smaller expenses that easily fly under the radar. They definitely add up – and this is where you can really feel some immediate relief
Lastly, while it’s definitely not common in modern business, bartering has been a pretty effective method of doing business since time began – and there may be an opportunity now for you to look for a mutually beneficial exchange with another small business or freelancer.
You’ve decided that now is the time to up the game with your marketing collateral. As such, you know that to play a bigger game you need some professional design and copy writing done for your product descriptions but it’s most definitely not in the budget to hire freelancers for the job. Think outside the box. Can you provide some value that isn’t monetary?
Could you propose working on a strategy with these freelancers to help give them valuable insight into your industry and hopefully other opportunities through your networks?
2. Get a cash flow forecast in place – based on a worst case scenario.
The reality is, things could get worse before they get better. So now is the time to get a cash flow forecast and a financial ‘buffer’ in place.
Hopefully you won’t need that buffer, but…peace of mind does wonders for your creativity and productivity – which you’re going to need plenty of in the coming weeks and months. I would suggest getting on the front foot early and getting a financial buffer in place to help you focus on the job at hand.
Can you get a small overdraft facility in place with your business banker? Can you increase the credit limit on your business or personal credit card? I’m not advocating taking on debt – hopefully you never need it. But it can be very reassuring to know that buffer’s there.
Are there any grants you could explore with the national, state or regional associations tat govern your industry? How about government small business grants or hardship assistance? You can often be surprised by the support and opportunities out there that you didn’t know existed.
In my experience when you have that security buffer in place, you approach things in a calmer, more methodical way. You’re more focused, more creative and you have more energy. This kind of approach is exactly what you’re going to need right now to navigate these challenging times.
So get on the front foot quickly, work out your cash flow forecast. Base your forecast on a worst-case scenario (i.e. what is the absolute minimum cash you need available on a monthly basis for your business to stay afloat for, say the next 3 months, or possibly even 6 months – assuming you’re not able to trade) and get that buffer in place well before you need it.
3. Focus on current and future revenue generating activities – and diversify
It’s so easy in times of stress and uncertainty to lose focus, get distracted and find yourself gravitating towards tasks in your business that you find ‘easy’.
So ask yourself this question regularly: Is this a revenue generating activity that I’m spending my time on right now?
If the answer is ‘no’ then ask yourself: Is it critical that this gets done now?
If that’s another ‘no’… then shelve it.
Focus as much as you possibly can on activities and initiatives that are going to make you money.
Get creative with your product or service delivery. How can you continue to get people on to your tour or activity?
Can you restructure to run only private groups?
Can you reduce the size of your groups?
Can you strip out elements of your experience that may be considered a health risk?
Can you put measures in place to make your experience safer and ease customer fears?
If you run a tour business, are segments of your local market still travelling? Is your experience geared to the local market? If not, think about how you could adapt your service or experience to different domestic market segments, or perhaps to various clubs, groups, or societies with an interest in your niche.
What other types of customers are out there. Are there markets and booking channels that you haven’t considered before?
Is there a digital product that you could create and use to build awareness of your product or service, grow your list – and ‘warm up’ your target market? Better still, could you create a digital product with enough value that people would buy it?
Start to think outside the box. Opportunities are everywhere.
Let’s use an example from another industry to illustrate:
Say you run a small cafe in beach-side Sydney. You’re freaking out. Sales have plummeted in the last 2 weeks. Local businesses have started sending employees home to work and your regulars are now ‘social distancing’ and avoiding crowded cafes.
You’ve done the numbers and you’re literally 2 weeks away from closing the doors.
What could you do?
How about a ‘drive by’ service. You could promote it across social media. Give a mobile number for customers to SMS their orders in. With their order, you ask them for a specific time they want to collect. You provide clear instructions on where they should wait to collect. You have one staff member dedicated to transferring SMS orders to dockets and running coffees out to the street (or round the corner..or across the road..whatever works). This staff member wears gloves and carries a packet of alcohol wipes – one of which they hand over to the customer with every order to wipe their cups down and ensure it’s germ free.
I would definitely use that service!
What kind of ‘out of the box’ ideas can you conjure up for your product or service?
But lets say you’re a tourism business operating in a destination like Italy, or Spain – a destination currently under total lock down.
The story is a different one here. These countries are facing a different set of problems.
So what could you be doing if you’ve been directed to cease operating?
Or if you run a kayak tour and every campground within 100 miles has been shut down?
Why not take this time to step up your sales and marketing efforts?
If you run day tours, could you step up your sales calls to hotel concierges, or to Destination Management Companies, or Inbound Tour Operators?
Or if this isn’t allowed with restrictions in place, how about building out a high level presentation of your experiences and organising online training sessions to the sales teams of key customers or potential new customers
A lot of employees are going to be working from home with plenty of time on their hands over the coming months and they (and their employers) would jump at the chance to improve their product knowledge or learn about something completely new that may give them an edge over a competitor.
Get creative and keep yourself front of mind. Make sure you’re in pole position when the race re-starts. Now is not the time to back off – as many of your competitors might. This is a time to be putting yourself out there and building relationships and awareness of your awesome product with potential customers or distributors.
But if you’re one of those businesses whose ability to trade has been severely hampered, you should also be looking for the opportunities that are out there right now to ring the cash register.
If you operate in the tourism industry, a great way to inject some immediate cash into your business is to promote gift certificates to your community for future travel.
You could pitch it as a ‘win-win’ by:
- Offering an experience discount when they use the certificate to book
- Throwing in an extra special ‘thank you’ gift when they book (free e-guide book to your destination, or some local chocolates…etc etc)
Have you been building a list? Have you got a solid instagram following?
Have you got an army of raving fans out there that have taken your tour and can’t stop talking about it?
If so, ask them to share your gift certificate promotion with their colleagues, family and friends.
You could even improve the odds that a) they’ll share and b) their friends, family and colleagues will buy by making life easy and sending them an actual email script that they could use.
4. Minimise the damage
It’s inevitable that – as a business owner in a service industry – you’re being hit with plenty of cancellations right now. Try and convert as many of these as you can into future bookings.
When you receive a cancellation, first of all acknowledge that the customer is well within their rights to request one and that you are happy to process their cancellation immediately…
But then ask them the question: Would they consider an alternative? Would they consider allowing you to hold their payment over for a future booking?
While we’re on the subject of cancellation policies, if you’re a service business, now is a great time to review yours and make sure it protects you in every circumstance. Your cancellation policy should accompany every form of booking confirmation – both bookings via distribution partners and direct bookings. It should be well-considered and fair. Most importantly it should be unique to your business – and I believe it should be enforced in every situation…as company policy…without fear or favour.
So I thought it might be useful to give you a little ‘look behind the curtain’ at what our cancellation policy looked like when I was running Melbourne Private Tours.
I’m sure there are plenty of great examples out there, but ours definitely worked for us. Feel free to use it for inspiration, or to re-work it to suit your business if you’re not confident that your current cancellation policy protects you well enough.
5. Seek community support and advice from a mentor or business advisor.
It’s crucial right now that you don’t feel like you’re going this alone. Make a point of surrounding yourself with like minded business owners that are feeling your pain. If you’re a tour or activity business, get involved in Facebook groups such as Tour Operators United and How To Grow a Tour Business. There are literally thousands of members in these groups sharing tips, ideas, suggestions, best practice and up to date information and the same can be said for pretty much every industry out there. Sign up for webinars and free resources. Reach out to fellow operators in your city or destination for a chat, to commiserate and maybe even to collaborate – who knows? We’re all in this together. Now is not the time to have competitors.
If budget allows, consider finding a mentor, or engaging a business coach.
Something led me in early 2009 to take the plunge and engage a business coach. I can’t explain it, I just knew it was what I needed.
Financially of course the timing was horrible. It was ‘eye wateringly’ expensive and I had no idea how I could afford the monthly fee. But I somehow found the money each month and for 6 months we worked together every fortnight.
It changed everything.
To this day it is the best investment I believe I ever made. Those 6 months we had that support and guidance literally saved us from the startup scrap heap.
Our business coach changed the way we approached everything and he introduced concepts to us that were critical for any micro business with ambition to scale…it was stuff I’d never even heard of.
- Implementing the right systems and processes that would allow us to scale quickly
- Setting tangible goals, creating a clear vision for our business, and setting weekly structured team meetings to measure our progress.
- Thinking, talking and acting now like the business we planned to be in the future
- The need to diversify and stabilise our business with multiple revenue streams.
…and so much more.
Importantly, our coach held us accountable for the goals we set – and that alone was priceless.
Whilst business owners around us were tightening belts and deeming such expenses ‘unnecessary’, finding a way to make that investment sped up the evolution of our business by many, many multiples and we got to a place within a year that might have potentially taken us 3-5 years to reach – if we ever got there at all.
So, hopefully you’re now armed with a whole bunch of practical, actionable tips, ideas, suggestions and inspiration to ride this crisis out and prosper on the other side.