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It’s starvation time. Again.
If you have a salaried job, imagine coming back to work all psyched up for a big year ahead, then your boss cancels your pay cheque for the next six weeks.
“Sorry,” she says. “We’re feeling uncertain at the moment.”
How does that feel? And good luck sorting out that fat January credit card statement.
That’s effectively how it is for your trusty friends in events, and in hospitality, entertainment, small retail and many others. For the third year in a row. We all had solid activity booked in. This would be the recovery year, the hot vaxxed summer of revenue rebuild.
We came back to work excited to smash into it, and spent that first Monday opening a wall of cancellation emails. Our businesses have lost seven figures in Jan/Feb revenue in the last fortnight.
Oh and in December we had also committed to a seven-figure capital investment we have to pay for over the next few months. A big, optimistic call to get on the front foot as we came out of the bad years.
Have you considered … a pivot?
Friends are asking how I’m handling it, if I’m upset.
For those of us in affected fields, our brains are now entirely comprised of scar tissue. It’s hard to muster up any degree of freak-out emotion, because we can’t even remember that distant era when we weren’t having the shit kicked out of us. While getting endless advice from people in comfortable, secure jobs.
“I read about this interesting pivot in the paper last week, I’ll send you the link, it might be something you can use.”
I know they’re only trying to help. But I also feel they’d happily visit famine-stricken nations and suggest to the locals:
“Have you considered agriculture? The food literally just grows up out of the ground, it’s well worth looking into.”
I’m reluctant to do another How To Keep Your Business Alive story this year, because I prefer to mentally live in the sweet future that’s just around the corner. But industry friends kept asking if I have any thoughts, and this one is useful even for those unaffected by virus cancellations, at least if you’re in B2B.
Boring, nerdy things will save your arse
While other, more entertaining areas of business will get you out of bed in the morning, it’s the boring, nerdy things that will save your arse. Hear me out:
Payment terms are in the top 5 disciplines for SMEs, yet most people are terrible at it.
It’s always been so, and it’s doubly important if you’re in a COVID-affected field. It’s time to toughen up on terms and conditions. Not unreasonably so, but enough to keep you afloat. Government decrees are one thing, clients just deciding to bunker down is another.
An inescapable part of the business experience is clients who would like to make their problems your problems.
It’s hard to avoid, because they probably hired you for your problem-solving abilities. And there’s no doubt it’s a difficult time, with totally reasonable grounds for customers moving the goalposts.
Your survival depends on finding that tricky balance between helping out so they’ll remain a good client in future, versus underwriting their risk management whims with your own cash.
Trashing your business is not good service
It goes to the heart of what service is, and it runs through the whole sales process.
We have had issues with sales people who come from a service delivery background, who take pride in solving every problem the client can throw at them in the triage-style chaos leading up to an event.
Client: Can we change the event setup time from 9am to 7am?
Account Manager: Yes.
Client: Our panel has grown, can we set up for seven people on stage now?
AM: No problem.
Client: The CEO wants a teleprompter, can you arrange that?
AM: Too easy.
Client: Oh and the event will now run three hours longer than we planned, I can’t get any more budget so are you able to stay within the figure we agreed?
AM: (Keen to solve the problem) Uh … I’m sure we can do that.
Though that last-minute change of plans will jack up our costs, the account manager feels it’s bad customer service to say no. They see it as “a value-add”.
It’s bad account management. You have enough to worry about without taking on your client’s (possibly contrived) budget problems. Their boss’s decree to stay within a budget does not entitle them to demand suppliers lose money.
If you visit a restaurant and order lobster, and let the waiter know your boss has slashed the travel and entertainment budget so you can only allocate $24 for a main course, that will not end well.
Yet thousands of small businesses tie themselves in daily knots trying to deliver that $24 lobster meal purely because the client asked for it. Offer them something they can afford.
Running your own business into the ground is not good service.
Part of service is reliability. You can’t deliver that service they like later in the year if you had to let most of your staff go in February.
Get money up front if you can
The most important step is to ask for some money up front. Right now, when they book you in. It doesn’t work for every industry, but if you can, do it.
If they’re not OK about paying a deposit, they aren’t serious about using you.
It can be a relatively small amount, the effect is the same. It commits them to action. It means they have to go through all the internal process involved in actually paying you. In their mind, they’re going to use you.
Even if they postpone, you hold a stronger hand to negotiate.
If you’re providing credit, ask for another stage payment just before you do the work. You can document whatever payment deadline you like for the rest of it, but that means nothing. You’re entirely at the mercy of their admin stonewalling and blame-shifting that can drag out for months.
Beyond the COVID years, deposits are a good habit to get into if your product has a long lead time, because it stops competitors luring them away.
In all my time in business, I’ve never seen a client who’s paid a small deposit then choose to use another supplier. Even if it costs less including the lost deposit. It just doesn’t happen.
I have nothing but respect for restaurants that take a deposit that’s not refundable if you cancel less than 48 hours out. They all should do it.
You’re asking them to commit real money in labour and produce to be ready for you. If you’re too spoiled to support that, you deserve to spend the rest of your life at home eating microwave meals.
Cheque’s in the mail
Here’s a fiendish idea you could try. An ex-CFO friend who now runs some large entertainment businesses gives electronic refunds for legit situations, like show cancellations.
But for small complaints from customers just having a whinge, his accounts department posts them a cheque for $14.99 or whatever. The deposit rate for those cheques is close enough to zero.
I bow to his evil genius.
Try to stay calm
I’m still optimistic about this year, once we get through the next couple of months. I stand by this story I wrote last April (Get out of your mental tracksuit pants) about the opportunities this chaos will present.
Because it’s a no-news time of year, the Omicron variant (and Novak Djokovic) have consumed all media space for weeks. The fear is natural. Imagine if, in the pre-COVID years, they’d run the daily death rate from other illnesses each night in the evening news. That constant tolling feeds straight into our worst medieval fears.
It’ll calm down. Two years of weirdness will not change human nature: we’ll be out there again in some form or another.
Until then, unleash those nerd skills and get paid for some of that effort.
??? AN EXCITING NEWS ANNOUNCEMENT NEXT WEEK! STAY TUNED FOLKS. ???
Also do not approach 2022 without reading Undisruptable, the business book for people who generally hate business books. Sixty short, easy-to-read chapters on how you can escape a job that sucks and take control of your life. It’s still the #1 business book by Customer Review rating on Booktopia so check it out.
Also I write a story each Tuesday, drop your email here to get it in your inbox.
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