Five tips to help you prepare your business for what comes after COVID-19

Words of advice for mortgage brokers and planners from an eternal optimist, TrailBlazer Finance Managing Director, Jeff Zulman

I am a person who thrives on stress. This is often much to the ire of my wife and family – work and otherwise. However, there are certainly times when the added clarity provided by a productive burst of cortisol can help shape the path forward when others are understandably mired in anxiety and indecision.

The COVID- 19 pandemic is, of course, a disaster on a global scale. Yet, perversely, it provides each one of us an opportunity to adapt, modify, seize the opportunity that change affords and ultimately thrive. The challenge is to retain enough presence to see the opportunity, even in a crisis situation.

My focus, as a businessman and financier, is on the things I can influence and change in order to prepare now for what will inevitably follow.

By way of example, my team has instituted daily Zoom “stand-up” calls. Previously these daily physical meetings were simply rapid-fire sessions designed to ensure we were all on the same page. Today, our Zoom calls not only ensure that clear communication continues, but they have become a vital vehicle for team engagement.

Of course, mortgage brokers and financial planners are well acquainted with working from home or small offices; coffee shops their second meeting room. Now we are all adapting to a world where young and old alike have a new litany of words in their Lexicon: Zoom, Hangouts, Webex. And there’s plenty of upside for our new virtual reality. We can bank the time savings gained from not sitting in traffic and commuting to client meetings, and in doing so improve productivity as well as increasing the frequency and depth of interactions – cut through the superficial and connect on a deeper level. When we deal with how people are feeling, just as much as what they are thinking, we can drive more genuine, long-lasting engagement.

So how do you identify those areas where you can retain control, adapt where you need to and identify and seize opportunities, however small?

What can you do to prepare for what lies ahead?

1. Embrace your learnings and see them as opportunities.
This time of crisis will ultimately forever shape and change the way we do business. As the founder and MD of a small business, by design, I have been able to build and scale my business so it can operate virtually. Most in the broking and planning community would find themselves in a similarly fortunate situation. There is a chance many businesses will never look back from having remote workforces. I will certainly encourage my team to continue to work increasingly from home– provided they remain goal-focused and productive. I see these six months as a training ground for a new, more virtual tomorrow.

2. Sniff out inefficiencies and solve them.
Process improvement. A lot of us despise the term, and like even less identifying, designing and implementing process enhancements. But all of us know that there is only upside if we can get it right. Think about how to do things better, faster and cheaper. Are there out of the box software solutions you can use to solve ineffective client management systems or product delivery? Where can you automate workflows and repetitive tasks? What gaps need to be plugged in the way you do things so you can do them better?

3. Futureproof. Adapt your business model.
A common cause of anxiety is around concentration risk and subsequent exposure. Diversifying your business – products, verticals– it takes time, cost and energy, but this sort of transformation has the potential to drive tremendous top-line growth and defray risk. It doesn’t mean you have to become an expert in a variety of new financial services yourself. Rather seek out others who have a similar profile, work ethic and value system as you. Together provide a broader range of services. Remember that often 1+1=3. We have helped countless clients build value in their businesses by embracing a more diverse revenue model through acquisition of established books of business, mergers, or funding the hiring of additional skills and expertise to target new markets.

4. Cultivate your relationships.
One thing we will come out of social isolation bearing is an appreciation for the strength of our relationships. We are seeing some of the best and worst, but largely the best, from other people, Governments and businesses, as we grapple collectively with the ever-changing situation. Collective goodwill and compassion are at an all-time high, so now is the time to reflect on how we can pay that forward in our personal and business relationships. People will remember how we responded during this time and it will colour the way we move forward.

5. Above all, prioritise.
Fight your battles and direct your energies where they most need to be focused–be that towards your families and well being, finances, clients or communities or, most likely, a combination of all of the above. Be kind to yourself and do what you can. Structure, routine and exercise help me keep moving forward. Where you can, try to prioritise and set realistic goals – it can be a good way to reclaim a sense of control.

I don’t know how long this will last, but I do know that the world will not come to an end in three to six months. It may be battered and broken in places and undoubtedly there will be a period of rebuilding, but ultimately many will emerge from this wiser and stronger, and certainly more resilient.

And we can help. We are here to do what we have always done, assist other small businesses to survive and thrive through uncertainty and beyond.

Just remember, you are more adaptable than you realise. Stay safe, be well and take care.

Will you be swimming between the flags this year or will you drown under debt?

I started my year with a scary experience. Whilst ocean swimming early one morning with friends beyond the breakers, I lost my form – and then my nerve. With my friends out of sight and shouting range, I decided to make my way back to the safety of the beach. However, to do so meant battling through a churning, dumping swell. I felt totally out of my depth. When,  finally, I made it unsteadily to the shore, I was shaking, heaving and questioning my choice of hobby. Fortunately, it was just one bad day at the beach for me. I could chalk it up to experience and I was back in the water two days later. I am one of the lucky ones.

While listening to a recent podcast with Accountants Daily, My Business Editor, Adam Zuchetti about small business tax debt, I had a flashback to that experience for an entirely different reason. Adam reported that a staggering 20 per cent of Australian small businesses are currently on an ATO payment plan. That’s some 800,000 small businesses who are financially overwhelmed, many of whom are drowning in debt.

One of the more shocking revelations from the piece is the comparative level of SME (small to medium enterprise) tax debt when compared to corporate Australia. The former cohort owes a whopping $16.5 billion with $1 billion contested. Meanwhile, their corporate counterparts owe just $1 billion and are locked in disputes for six times that amount. This points to the glaring discrepancy in resources between the two segments and the ability of the big guys to fight back, whilst the little guys are often forced to roll over and get carried out to sea. Moreover, it hints at the ongoing role corporates play in stretching payment terms to SMEs, thereby contributing to SMEs failing to meet their tax commitments.

It also highlights the pervasive fear of retribution small businesses feel towards the ATO.  This fear is now exacerbated by harsher penalties for missing tax payments, single touch payroll and new laws allowing the ATO to disclose tax debts to credit bureaus as part of comprehensive credit reporting. You may even have read recent press reports of harsh treatment on calls by outsourced “assistants”.

Daily, we also see a lack of understanding and education about the role the ATO does provide in easing the burden of tax debt – such as payment plans. Often SMEs mistake this for some form of back-door, inexpensive funding which, of course, it is not. The ATO is not a quasi-bank. This cocktail of fear, misunderstanding and concern about being sucked under contributes to murky and scary waters for SMEs who are struggling to meet their tax commitments. It can get in the way of proactively putting in place a plan to better manage debts by matching asset and liabilities and using recurring income to service longer-term, fully amortising debt.

I have started several small businesses myself and empathise with how easy it is to go a little off course and get sucked in out of your depth.  Suddenly you are fighting the rip, rather than working your way clear.  Progressively exhausting yourself and depleting your resources, unable to find a route to swim clear. We understand that an ATO payment plan is a sign of a struggle and that the struggle is real for small business.

Sometimes small business just needs someone to give them a break; throw them a life ring or give them financial support until they can catch their breath. There’s no shortage of new fintech lenders who have plunged into the market, particularly in the vacuum left by larger lenders. Some offer fast access to cash, but beneath the surface, their interest rates are so high they will inevitably cause an already weakened swimmer to drown under the additional debt burden. Have they helped the problem? Almost certainly some have, certainly in terms of addressing short-term cashflow needs. Are they solving the problem? Not really. The core issue of late payments will have to be addressed by government and regulators in due course.

The ATO will need to do more to educate small business about how they can help. In the meantime, the role of advisory services and prudent lenders in educating their clients about funding their businesses in a sensible way is more critical than ever.

As we swim out and greet 2020, will you be swimming responsibly between the flags or are you already a little out of your depth? As a sign of our commitment to small business, and staying afloat generally this summer we will donate $100 to Surf Lifesaving Australia, from each SME loan made to a financial planner, mortgage broker, accountant or property manager.