FEATURE
27
Business terms and processes had to change overnight , says Solomons . “ We started asking customers upfront if anyone in their household had been exposed to the virus . If the answer was ‘ yes ’, we ’ d turn away the business . We ’ d never done this before , but if my staff don ’ t feel safe around a customer at any point , they can walk away . The risks to their health are not worth it .”
It ’ s a Catch-22 approach , he says : requiring upfront payment has stabilised cash flow to some extent but it has also impacted revenue : if customers decline to pay upfront , Morningside Plumbers may decline the job .
This put enormous cash flow pressure on the business , which affected its ability to meet supplier payment agreements . “ We ’ ve developed strong relationships with our suppliers . We had to lean into those relationships and the trust we ’ ve developed over time when renegotiating payment terms and securing supplies during lockdown . All our suppliers were operational in varying degrees , which meant we could continue to work . We ’ re very lucky . A lot of businesses weren ’ t .”
Covid-19 cash flow supply management has been a constant juggling act , says Solomons . “ There was more leeway in the past , where I trusted existing customers to pay once work was complete . But some of our good-paying , regular customers have fallen on very difficult times and , unfortunately , I can ’ t let that impact my ability to pay my guys ,” says Solomons .
Morningside Plumbers has also adjusted its approach to inventory acquisition . “ We ’ re looking at buying larger quantities of certain volatile items at current prices . This will let us peg our pricing and not only maintain , but hopefully stretch , our margins where possible .”
“ Everyone is walking this tightrope , but if I don ’ t make these tough decisions , my business will not survive .” This included letting some staff go and reducing others ’ wages . “ We had to become as lean as possible by identifying every expense we could cut .”
Most plumbing companies have taken the upfront payment approach , says Solomons , simply because they had no breathing room to begin with . “ I ’ d be hard-pressed to find any business that actually had breathing room before Covid-19 . We came out of a bad economy and into a worse one . I spent an entire week researching and applying for business relief from banks and the government , but that support is really for companies that are literally on the brink , or over it . We had to fight this , mostly , by ourselves .”
Adapting to paperless Once Morningside Plumbers ’ job flow started increasing , it was time to focus on returning to business as usual . “ I could never have predicted a year ago , when I moved the business into the cloud , that Covid-19 would happen but that I ’ d still be able to trade unaffected . It was a stroke of luck that I didn ’ t have to change much in terms of how we operated . I could never have imagined running my business in these circumstances using our old paper-based system . It would have been impossible .”
Businesses that change strategy , venture outside of their lanes , and reinvent themselves will survive crises , Solomons believes . He believes that companies need someone who will stand up and say , “ We will not die without a fight . In our company , that person was my Operations Manager , Dean Chait . Businesses need a different mindset and a different attitude to survival ,” he says .
In difficult times , the marketing budget is usually first to go — and Solomons considered cutting his . But rather than culling it completely , he changed strategy .
“ I took a portion of my marketing budget and I squeezed everything I could out of it . I started with an amount I was willing to lose if it didn ’ t work out . It was a calculated risk . We had always run targeted campaigns on Google AdWords , but we tried new things and measured the results against new business . As it turned out , it worked — fortune favours the brave .”
Solomons has solid advice for SME owners that want to create their own luck :
• Make a decision and stick to it : “ Preface every decision with : ‘ We may get this wrong , but we ’ re going to do our best ’. Take calculated risks , follow through with your decisions and act quickly . If it ’ s not working , stop doing it and try something else . Flexibility in decision-making is key .”
• Set a goal : “ We expected the knock in turnover , but we also knew that if we didn ’ t set a goal , we ’ d just be waiting around for the phone not to ring . Having a goal meant that , when the phone did ring , we maximised our profitability . In the first month of lockdown , we set a target to achieve 50 % of turnover . We achieved 66 %. The following month , we were on target to achieve 75 % to 80 % of turnover . We had similar goals for debt reduction , debt collection , vehicle maintenance and repairs , and marketing and monthly expenses .”
• Be deliberate : “ You can ’ t just throw your rod into the water and expect to catch a fish . Because we reduced our marketing budget to a fifth of what it was , we had to be deliberate with our audience targeting and the type of adverts we put out .”
• Learn a new skill : “ I learned about social media marketing and making videos . Now I do all the content for my company ’ s social media pages and it ’ s paid off .”
• Accept that you ’ ll make mistakes : “ We didn ’ t do everything right . But we worked hard to maintain business .”
• Don ’ t get stuck in survival mode : “ It ’ s not my place to comment on how anyone manages their business in a difficult situation , but a fighter ’ s mindset has served us well ; maybe it will serve you well , too .”
• Communicate early and often .
• Look for opportunities .
“ I ’ m feeling positive about the future ,” says Solomons . “ Our response to Covid-19 was not perfect , but it was calculated and considered . Luckily , it worked .” PA
“ Businesses that change strategy , venture outside of their lanes , and reinvent themselves will survive crises .”
November 2020 Volume 26 I Number 09 www . plumbingafrica . co . za