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The Whale Blubber Model
I spend a ton of phone time with people in our still-immobilised industry and the number one question by far is:
“Do you think government subsidies will extend after March for industries that are still shut down?”
I don’t think they will.
Sorry to be Mr Pessimism but you have to be realistic.
I don’t often look to legendary musician/record producers for business strategy.
But I keep thinking of Brian Eno (Roxy Music, Bowie, U2, Talking Heads) talking about the declining fortunes of the music industry.
It’s all whale blubber to him:
“I think records were just a little bubble through time. There is no reason why anyone should have made so much money from selling records except that everything was right for this period of time. I always knew it would run out sooner or later. It was a bit like if you had a source of whale blubber for fuel in the 1840s. Before gas came along, if you traded in whale blubber, you were the richest man on Earth. Then gas came along and you’d be stuck with your whale blubber. Sorry mate — history’s moving along. Recorded music equals whale blubber. Eventually, something else will replace it.”
Are you in the blubber game right now? There are plenty of industries that have a strong processed-whale smell about them at the moment.
City cafes. CBD office blocks. Events businesses. Travel agencies. University empires built on fee-paying overseas students.
Maybe some industries aren’t coming back. At least in their previous form.
Are Good Times Just Around The Corner?
There’s plenty of good-times-are-back talk at the moment. Households and businesses have $200 billion saved during the pandemic, purely from a year without airport parking.
Superficially, numbers are good. Here’s a media economist certain we’re entering ‘the Roaring 20s all over again’.
There’s an absolute sense of ‘we’re through this’ among people in fields that aren’t affected. Social gatherings are a procession of people telling me they’ve never had more work on.
Over in our field — to quote a major venue general manager I spoke with the other day — ‘our business model is quoting, confirming bookings, then cancelling bookings, rinse and repeat’. Over and over, each time state borders slam shut with three minutes notice.
You get to do ten times the sales and admin, with zero times the revenue.
I don’t share the Roaring 20s shtick. I’d rather be expecting another garbage year and be pleasantly surprised if there’s upside.
Australia: Test Pilots For The World
Along with our abandoned city streets, there are armies of zombie companies propped up by JobKeeper. When they go, the effects will spread.
You can’t trade while insolvent any more, that holiday ended over the break. If you’re a director of a troubled company, you should be talking to your accountant about where you’re sitting.
There’s no ‘it’s the vibe’ protection for doing ‘just an extra month or two’ of insolvent trading. It’s illegal right now.
You look at the rising job figures a little deeper and there’s a lot of part-time work where there were once full-time jobs.
When will we get a clearer picture? It’s interesting to be in Australia right now. As one of the first places to (hopefully) emerge from all the chaos, we’re going to be test pilots for whatever the hell happens next.
Unless you’re totally cashed-up, now is not the time to punt on a rad new strategy based on a LinkedIn futurist think-piece you just read.
Now is the time to be very careful and focus on how you’re going to make it to 2022.
If you can survive another six months you’ll have a much clearer idea of what’s going to happen. You’ll find out where and how people are willing to spend their money. Without the external supports, your competitor landscape will change.
Like all business things, the recovery will be slower than you hoped.
Who Will Survive?
The business that survive in traumatised sectors will be the ones that are good at the mostly-boring classic business skills.
Those that know how to do cash-flow planning, credit control and can read a balance sheet. Those who’ve got on top of their digital game. Those who’ve spent the last year talking to their clients about how they (the clients) are planning to get through this.
If you’re one of those businesses that just relies on looking at your bank balance and upcoming sales – and I’m always shocked how many of those there are – you are cooked.
If you weren’t re-investing in your business before COVID, you’re now another depreciated year down the track toward Old’n’Dirty Syndrome. Read that story for 13 things you should banish from your business right now. Post-COVID, clients will abandon you for fresher, cleaner competitors.
If your only strategy right now is hoping for government rescue, you’re doomed. And frankly you deserve it because the only sane way to look at business is:
- It’s all up to you.
- If any government help comes along, that’s a bonus.
Even before COVID, so many business people would bore you to tears with whingeing about ‘this government’ and what it should or shouldn’t be doing.
There are plenty of export businesses up in arms about the China trade-war situation.
Sorry, you built a business on one massive Communist customer and that’s your own risk management problem.
Yes you can debate if it’s fair or not that governments shower our tax cash on tradies and others that don’t need it. It’s not. Life and business is not fair. You have to deal with the reality, not what you wish would happen
I hope I’m wrong and that all my caution is unwarranted.
I’m still optimistic. In our own field, I have faith in the human need to get together and physically run with their herd. To gather, drink, talk shit, do deals and make new friends.
Whatever tech people tell you about what’s so dead now, never bet against human nature. It ain’t changing.
Believe in those humans.
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