Caught in the headlamps

From the Lionesses of Africa Operations Dept

Our Head of Finance (HoF) arrived this morning and made straight for our desk, sat down, picked up the spare coffee (which wasn’t spare as it happens), looked to the heavens as if for some divine inspiration, took a deep breath and started…

“So, you’ve written about how one must take a critical look at one’s management, to ease out those who cannot handle this new agile age where decisions have to be taken fast, without waiting for all of the facts and figures, and responsibilities cannot be ignored. The fact that Lionesses need their own management and team to think more with an entrepreneurial mind than a Lab Technician’s…

You’ve written about Mentors and how although they can be useful, they can never take the place of a decent Board.

You have written about the Board and why this is essential as a way to bring expertise deep within your company and the responsibilities and corporate governance issues (we tried in vain to interrupt to say that we hadn’t written that blog yet, but it was on our list)…

…but this is the age of Coronavirus. 

What happens if our Lioness’ business seems to be in the lock of a whirlpool where being sucked deeper and deeper into the hole seems to be inevitable.

What are the options available?

When a Rabbit gets caught in the headlamps of an oncoming car, it is an inability to see clearly, brought about by the fact that their eyes contain rods not cones that is their downfall. Although on one side these rods allow them to see clearly at night, it also means that until they ‘see’ the full facts, they do nothing, that in turn results in their untimely and rather messy death. This is what happens often to entrepreneurs who suddenly and without warning it seems at the time (although the warning signs were there shining bright), wake up, things come into focus, and they find their business is going bust. 

As Hemingway wrote:

“How did you go bankrupt?"
“Two ways. Gradually, then suddenly.”

Our Lionesses have heard of the words ‘Transformation’ and ‘Restructuring’, but seriously what do they mean, what do they , and how if our Lionesses really do have their backs against the wall, can these be used?

We cannot be afraid of talking about the dark places, because sometimes it is only by taking the tough road, that we come out into the light stronger. The night is always darkest before the dawn, although of course there is no guarantee, as sometimes the light at the end of the tunnel is simply yet another train coming fast towards us!

Remember that momentum is great if your business is growing and the sun is out, but momentum also works the opposite way and speed also picks up exponentially as things get worse. Look at India and Coronavirus. It took that country 179 days to reach the first 1 million Coronavirus cases and yet only 21 days to reach the second million cases - this is what it feels like being in the whirlpool of despair for companies experiencing a cash flow squeeze as the speed, insignificant at first, increases dramatically…

We helpfully add, “That which does not kill us, makes us stronger”, but the HoF then started to rattle off on what Nietzsche actually meant by that phrase and why it is always mis-quoted and…and…and… 

By the time we woke from our slumbers, the HoF was halfway back to the coffee machine to replenish ‘his’ cup.

So how do we transform our businesses?

Obviously there is not one size fits all approach as no business is the same, but there is one overriding piece of advice we always give: 

Speak to your customers.

We have already written about how to sell during this new Coronavirus era and that is via the Buyer’s Journey and through that you work with your customer to solve their big problems through your product or service. This is turn brings both parties closer together, creating a longer and larger bond.

Here we turn this around and ask our customers what they would like to see more of from us. What we should change, what types of product/service? What they see is the future of their business and how you can join them on that journey by planning and transforming your own business to walk this journey with them now.

Managers should be talking to their customers more. NO! Managers MUST be talking to their customers more. As CEO/Founder, Lionesses also MUST talk to their customers. 

Do not hide away! You must see the bigger picture, this can only be seen if you find out what your customers are seeing, thinking and feeling. It might well be that together you can work out where the future lies. If you do not ask your customer, you may just wake up one day to find that your largest customer has done a deal or gone into a JV with your largest competitor - then you’ll feel foolish for not asking and having the conversation!

The more difficult the terrain, the more you need a map and knowledge of where you need to go. Your customers will give you this and for free! They may even hold your hand during their journey, because customers too want to ensure a strong and nimble supply chain. It is also in their interests. Large companies such as Unilever work with their suppliers. They need strong suppliers and the Coronavirus has proved just how important a strong supply chain actually is.

What if you were in the wholesale business, so your warehouse was set up for large pallets and trucks going to various retail customers, how can you transform quickly, efficiently and above all economically?

Setting up a website shop is one thing, getting your customers and new customers to visit and spend is completely another thing. This is not an opportunity for you to try out the incredibly risky ‘I shall build it and they shall come’ business model. Websites and online stores need time, energy and effort on your part to grow and this does not happen overnight. Yes, it must be done, it must be built, but you must recognize this is an effort event, there must be someone in charge of this and responsible for all the add ons, such as customer complaints (you certainly do not want them aired publicly on Twitter!).

Of course you can stay as a wholesaler but now with an online wholesale shop, but wholesale may not be your problem.  Your problem may be that you are just not reaching the final customers and possibly this is because your own customer has for the time being dumbed down and has found someone who may not offer the same value as you, but has simply gone cheaper. Or there is lockdown and your customer (a High Street shop) is closed!

How can you transform your wholesale business into one also with a retail business overnight? For one thing your boxes are all the wrong size and shape. Your boxes handle 20 of your products, but online retail sales will be in size of 1’s and 2’s!

What we have seen a great deal recently is an increase in partnerships and soft deals. So fulfilment centres have started opening up that can handle pallets of goods, stocking them and then sending them out packaged nicely one by one as customers purchase on various websites. They will have access to the right sized boxes so that is one thing you no longer have to think about. Of course this will cost, but what you are doing is gaining yourself some desperately needed oxygen in the form of Cash Flow while you build your online footprint and store. That is extremely valuable.

Of course, none of this can happen if you do not have the structure and processes in place to be nimble, and that as we have discussed before, also includes your staff. They too need to think with an entrepreneurial mind. Just last weekend we discussed asking your employees, so this week in our reading we see that a number of major international ‘western’ companies have systems in place to ask their employees to think up ideas, even if they are wild and whacky. In fact some companies encourage the more wild and whackier, because within one, there may be an absolute gem of an idea that can be put into practice.

Try it! Start a competition amongst your employees. ‘How can we improve our business?’ is all you need to ask. If each month you award a prize for the most interesting and another for the most ‘Wild and Whacky’, we know that you will be pleasantly surprised by the results. This changes the mindset amongst your employees into thinking as an entrepreneur, not as a 9-5 employee. This is powerful. It also means that when you put new processes in place or you decide to dramatically change direction, so long as you bring your employees into and onto the thinking behind the journey (remember our blog on ‘Communication’), they will be 100% behind you.

Your sales team. How are they compensated? 

In our first blog just as Coronavirus hit the Northern Hemisphere, we rushed to warn our membership about what was coming and how they had to immediately put in place protection for Cash Flow. One of the points we made was to ensure that sales people were only paid their commission when, and only when, the invoices were paid. This is absolutely essential, not only for Cash Flow, but because suddenly your sales force will become well aware that when you say no more deliveries to a certain customer until they pay, not only do you mean it, but they in turn are not being paid until the customer has cleared their account. They will suddenly put their powers of persuasion into persuading the customer, but this also means that they too will start to think as an entrepreneur.

So that’s restructuring. Of course it is more than that, because just as a surgeon has to occasionally lop off an arm to save the body, so you will find areas that are just too unprofitable that they have to go. Or an employee who is just too inefficient, lazy and overpaid who refuses to accept a new direction. Or loans that are too expensive and have to be renegotiated (not impossible because they have already lent the money, the last thing they want is for you to go under and they get nothing back - so it is not the return on money that is their concern, but the return of money). But now as you struggle to swim against the current and out of the swirling water that is trying to take you down, now is the opportunity to take a broom and sweep all of these away.

At this point we took our blog into the HoF’s office, purely because in another life the HoF had been heavily involved in turnaround events and even the occasional restructuring (and we believe still ‘moonlights’ as such). “How was it so far?” we asked, “have we missed anything?” With a shake of the head all that was added was: “Indeed - Nothing concentrates the mind more than the hangman’s noose in the morning.” Slightly shocked at the directness of that quote but recognizing it was nothing if not succinct and apt, we asked about restructuring, something that none of us had experience of.

“Restructuring?

Think of it like this. The house is on fire, the firemen rush in, everything and everyone gets covered in water, there are casualties and some parts of the building cannot be rescued, but the building itself survives. It’s not pretty but you still have your business, albeit in a smaller more compact form. You live to fight another day, but now with the burnt out rubbish removed.”

With thoughts in our minds that it is no surprise that when faced with that kind of event the Rabbit is transfixed in fear (no matter what the Hof claims about cones and rods!) and recognizing that it is so much better to write about the light, we vowed to keep Restructuring for another blog and returned to our desks…