From the Lionesses of Africa Operations Department
We have covered the initial shock and awe of this terrible virus. We did not have enough time to prepare (but there was never going to be enough time), yet whatever we managed to do in the short time we had, will have significant results.
In that one month since we started our crash course we have covered the ‘Prepare’ and the ‘Resist’ parts of our 3-part Lioness Coronavirus Business Course, covering the the main and immediate issues of Cash Flow, Employee Health and Leadership.
The light will return and so we turn our attention to ‘Recover’.
It might seem way too early, it may well be the last thing you can think about right now but we can’t keep on thinking of the gloomy stuff, we are entrepreneurs, we are optimists, we are Lionesses!
As always these letters are simply to encourage thought. You know your business far better than us, so just allow our thoughts to hopefully spark some way of getting back to that fabulous moment when your excited mind was full of ideas, plans and actions - you knew what you wanted to do in life and you first pulled on those entrepreneurial boots and headed out to take on the world.
Much of ‘Prepare’ and ‘Resist’ concerned Cash Flow, no apologies - companies do not go bust because of a loss they made in a year, they go bust due to a lack of Cash (far quicker). That is why it is so central in tough times such as these to Conserve Cash.
For ‘Recover’ we need to think about how to Sustain Cash.
How do we do this?
Much of what we have put in place to conserve cash now, will of course also sustain cash in the future - the pile of photocopier paper will now be but a fraction of its former self, with everyone having worked from home, it’s amazing how little paper they will now use (obviously they might come back with a larger coffee habit, but that is something you will just have to wean them off, tell them it’s for health and safety reasons!).
Zoom meetings we now all know work, so that will cut out a great deal of costs such as flights and hotels for your sales staff. That is a huge saving for many companies. Likewise many local face to face meetings will be held quicker over Zoom and travel times will be dramatically cut (anyone who has had to force their way through the Lagos traffic will know that a 1 hour meeting takes 3 hours of travel). Remember - Time is Money!
Following these natural Coronavirus savings, we have to consider which parts of your business are expensive, which parts are difficult to control and manage (again, time is money and your time is especially expensive) and which parts quite frankly can be done better by others.
Take a moment to look at the Lioness co-lab pages here to give you an idea of some truly inspirational collaborations (and as you create your own with other fabulous Lionesses, please tell us about them as we truly want to celebrate all good news), but of course these are on the selling, marketing and truly fabulous side. We are wanting to talk about those other sexy parts of your business such as warehousing, delivery and accounting/VAT/invoicing/import-export paperwork management…ok, perhaps not so sexy, but this is where your cash is being chewed up.
Change fixed costs into variable.
Lower those (fixed) salaries and add on overtime (variable). Not easy to do, this is a contract issue so you will need the understanding and (signed) agreement of your employees. Explain this will allow you extra breathing space to allow more people to keep their jobs, whilst having enough manpower should business pick up further. Once up and running as per previous times, the salaries can be changed back again, but it is far better at the moment to have the flexibility if you can. Obviously employees are far more likely to back this if you have taken a decent cut to your salary.
Where can you collaborate with a neighbour on warehousing? Do you really need so much room? What is the cost of the warehouse? Are you using its full volume - could you put in a second floor or higher storage (N.B. safety please!), thereby releasing a large portion of the warehouse that can either be handed back to the Landlord (assuming the timing is right on your lease) or that you can sub-let to another business.
Just how many local businesses use all of their trucks all of the time? Perhaps you can provide the driver, they provide the truck. Could it be cheaper in the short term to use a local delivery service such as Shujaa Delivery in Kenya? We discussed in a previous letter rather than making your employees redundant, invest in them and their ideas. Perhaps your drivers would like to buy your trucks (with your help) and become self employed? This would reduce your workforce (fixed) and your maintenance (almost fixed) costs replacing them with a variable cost for each time you need to deliver.
These ideas are not as daft as they sound. We listened recently to an excellent africainvest.com webinar with Airline CEO’s talking of this for their businesses. Could they co-train their Pilots/Staff, rather than each have a very expensive training school? Why not come together for maintenance and service to create a single combined area of expertise.
Think outside of the box, nothing is off the table, they all agreed.
Airlines have one of the worst cash barriers of all industries, often running on only two months of spare cash (a very labour intensive business), so it was useful to see what these CEO’s including the inspirational Yvonne Manzi Makolo, the CEO of Rwanda Air (now there’s a Lioness!), had to say about the future of their industry. They all recognise life is never going to be the same again and were all thinking of where they would be able to sustain cash in the future, without compromising quality of service and most importantly the safety and health of the passengers and crew.
A digital future it will be, so embrace it.
Update your website now.
Investigate all ways of selling digitally (Facebook, Instagram etc). If you see a really good way of selling by another Lioness, don’t be shy, ask them how they did it - you are sure to get a warm (virtual) embrace and the help.
Consultants and trainers, look to Upwork; Fiverr and Patreon, suddenly your potential market has grown by billions (and you get paid in US$!!) !
Learn to do webinars. We watched an excellent webinar earlier this week with Clare Appleyard of Katannuta Diamonds (who also writes excellent articles for the Lionesses). In one simple webinar Clare was able to reach out and touch her old and current clients (often with a startling yelp of delight as one or another came online!), to encourage and engage with potential new clients and most importantly, to show her honesty and deep knowledge of her subject through answering some tough questions (yes, we did test her!) about her industry.
It was not a sales webinar, yet at the same time, it was. Quite brilliant.
Use of Interns.
Please do not waste this kind of opportunity. An intern is NOT someone who can just get the pizza and make the coffee.
Use them wisely. Please see an intern as a two way street. This has to be a win-win situation or else, please don’t bother. So, use them in areas where they can be taught something serious such as accounts, import/export documentation, and where they can teach you, such as social media, selling on your website, facebook etc.
They will generate huge warm PR for your firm if you treat them well and with respect. Obviously when the container arrives, they will also be the first to be in the warehouse (along with you!) to unpack.
Pick one with knowledge in areas you need help. For many students Social Media is a form of breathing, so use this - your firm is certainly going to need an expert in this and believe me, once they return to University, they will appreciate some part-time work on the side keeping your website up to date or your Instagram/Twitter fully loaded for a small fee. This real life training if done well is invaluable for them and for you.
Innovation.
Where can you innovate? Don’t try to reinvent the wheel, there are so many brilliant minds out there working on solutions. Use these innovations. One area the Lioness team are watching with interest is the delivery market. Many African delivery companies struggle with the ‘last mile’. Delivery companies built on a northern hemisphere design whereby every house has a number and post box, does not necessarily work in the densely populated African cities or the very sparse villages, so a number of delivery companies have indeed gone bust because they simply could not deliver enough packages to enough houses to the high standard expected. If you are adding B2C to your business you need the exact address. Perhaps encourage your customers to give you their address backed up by 3 words that give an accurate position down to 3 metres. Sounds strange, but a company has split the entire world into 3 metre boxes and allocated 3 words to these which is then linked straight into GoogleMaps. This can be found at what3words.com and comes in a handy downloadable app for your customers and drivers. Along with the address this is a perfect combination. It will save your driver a large amount of time (and therefore money) searching for your customer…
And finally, prepare to reopen slowly. Do not get all of your employees excited about an instant return to work. There will be supply problems, machinery problems and certainly sales problems as customers will be tightly holding onto their cash. There will also be returned stock. A slow opening will be your only option. Bring back people in phases.
As Mr Ian Mcclean (MD of John Smedley, the UK manufacture of jumpers for Royalty and Popstars the world over) said recently in an FT interview:
“My fear is that more businesses could go bust during the restart phase. Closing down was the easy part. Opening up again could be 10 times as hard.”
Watch that Cash!