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Worried about a recession? 11 steps to meet a coming recession with confidence
Andrew Stubbs • Nov 16, 2020

It's no secret that a slowdown or contraction in economic activities happens from time to time. 

Many business owners reading this will have experienced the Global Financial Crisis and/or the COVID-19 outbreak. 

If you still have a business, you clearly made some of the right moves. 

Which leads to the question – what are the right moves now to recession-proof your business?  

Most companies have a relatively narrow margin for error. A 10-percent decline in revenue could wipe out the entire bottom line of a business. 

Having a contingency plan in place to manage profit is just one of the broader areas to address in times of crisis. 

Change is going to be necessary – that much is obvious. But, specifically, what actions should you take? 

Following are 11 actionable steps to shore up your business and defend it against the worst effects of a major economic downturn.

  1. Assess your business's health to identify the problem areas

Where does your business stand right now? 

It's important to assess this honestly. 

Have you started to feel a pinch in your budgets due to a decline in consumer spending and available capital? 

That's quite normal in the months leading up to a recession. 

You will likely need to make some difficult decisions regarding product pricing, marketing initiatives, hiring, benefits, and new launches.

  1. Realign talent where it can be most productive

A recession is hard on everyone, and while it can have a damaging impact on morale, you need your employees to be more efficient and productive than ever. 

This is no time to lose your best talent. Instead, focus on maximising it and ask yourself how you can better meet their needs? 

To ensure your best talent does not drift away, you may need to realign them with new roles in your business or restructure your organisational chart.

  1. Build a cash reserve

The first thing that happens when recessions hit (or are about to hit) is that companies start paying invoices more slowly. 

Conversely, they also start asking their clients to pay sooner. 

Ultimately, this scenario affects your cash availability. Without a good cash reserve, chances are you  won't survive a recession. 

Unfortunately, it's that simple. So, work on it right away – don't wait for the recession to hit as it will be too late.

  1. Manage invoices, payments, and debts carefully

As clients start taking longer to pay and others go out of business and can never pay you, your cashflow naturally suffers and your cash reserves get eaten into. 

This can really damage your business's fight for survival. 

To minimise the effects of reduced cashflow, manage your invoicing and collections more carefully : that generally means invoicing early and following up on payments promptly. 

Remember that debt compounds quickly when budgets tighten, so pay off vendors while you have the cash and claim what customers owe you as soon as possible. 

  1. Trim existing costs

Look at your existing costs and eliminate unnecessary expenses . Leave no stone unturned. 

While outsourcing can help you save money, be very careful about outsourcing important strategic or operational functions. 

Essential business roles and functions that make you competitive (your "special sauce") are usually best left in-house. 

The non-essentials that are outsourced will vary from business to business – but they are usually the easiest roles to fill and, also, the easiest to trim when a recession really starts to bite.

  1. Scrutinise your financial statements

If a recession is approaching, it's never been more important to keep track of your company's financial statements.

This is just good management practice but, in good times, it often gets forgotten.

During downturns, it's more important to keep your accounting updated and review reports regularly so that you have a clear picture of what's around the corner.

  1. Diversify your client base

Are all your eggs in one basket?

One of the greatest mistakes you can make is to have your revenues concentrated in a few clients. 

During good times, this may not be a concern but during a recession, it can kill your business. 

If one (or a few) of your clients leave, go out of business, or start paying slowly – the sort of things that happen during downturns – it will seriously impact your business. 

If you start diversifying your client base now , you will be in a stronger position during a recession as it will soften the blow of any one client going out of business.

  1. Focus on your strengths-and your best customers

Identify the strengths that have enabled your success to date and those that will be important in the future. 

Ask yourself:

  • Which of our capabilities and skills are most critical?
  • What distinguishes our ability to serve customers effectively?

Also, identify your highest-margin customers and understand what you are doing right for them. 

Develop a game plan, in the event of a downturn, to protect and build on the strengths that have allowed you to be indispensable to them. 

In the event of a dip in business, rather than cutting costs across the board, be ready to shift resources to retain these high-margin customers.

  1. Diversify client acquisition and marketing channels

Diversifying your marketing channels and client sources will put you in a stronger position to attract new clients on the "front end" of your business as some clients inevitably fall off the "back end". 

What happens if you have a single source of clients from one marketing channel and it dries up? It will be very difficult to compensate for lost clients. 

Consider lead capture strategies, email marketing, social media, Google Ads, Facebook Ads, as well as more traditional offline ways to bring new clients to your business. 

Now is not the time to cut back on marketing – it's time to be smarter about your strategy.  

  1. Win the competition's customers

If your business is going through rough times, it's likely that your competitors are too. 

One way of expanding your client base to prosper in tough times is to win customers from your competition – disgruntled customers who you can potentially promise a better service to. 

To draw customers over to you, offer something extra or a little different to what the other guys provide.  

  1. Look after your existing customers

It's much easier (and less costly) to get sales from existing customers than new ones. 

To do that requires looking after your existing customers so they do not drift away. This can increase sales without incurring the costs of finding new customers. 

Focus on providing excellent customer service. Ensure that your customers or clients love what you do or sell and keep them happy by identifying and meeting their needs. 

You want to retain their business at all costs during a recession even more than at any other time. 

You can't do much about a recession but you can prepare your business for it…

Recessions are unavoidable but if you plan ahead, your business can survive and grow stronger as a result. 

Ideally, this is an ongoing process started when times are good – not just a reaction when times get tougher. 

Unprepared businesses look to slash costs, reduce employee numbers, and take other short-term measures rather than carefully planning to be well-positioned after the recession passes. 

To recession-proof your business and ensure you have a competitive edge when the economic climate starts to bite, follow the steps above.

Why Your Business Needs to Invoice Using the New Peppol Network

By Andrew Stubbs • 05 Jun, 2022
Here's some good news if your business sends invoices to business or government customers. Peppol* is on its way. (That's Peppol, not Peppa .) Ever had this conversation in your business? You or one of your team: "Hello, I'm calling to follow up the invoice we emailed to you last month. It hasn't been paid yet." Customer: "Really? We didn't receive that invoice?" In addition to the time and expense of following up, the cash flow delays create stress for you and they hurt your business. Thankfully, the adoption of Peppol will solve this problem. What is Peppol? Peppol is an obscure acronym for Pan-European Public Procurement On-Line. What's more important than what it stands for, is what it enables. Peppol is an international 'eProcurement' framework for the electronic exchange of information. It creates a standard approach for governments and businesses to structure and exchange information such as invoices and other documents. What Peppol means for you and your business Peppol makes electronic ordering, invoicing and shipping between governments and private companies faster, simpler and more secure. This means your business will get paid faster when dealing with government and larger businesses. In 2019, Australia and New Zealand adopted this platform for e-invoicing which, when implemented, will make 'we never received your invoice' issues virtually impossible. The new e-invoicing system is more secure than email and provides many other benefits. Which countries are adopting Peppol? There are currently 40 OpenPeppol member countries: 32 countries in Europe plus Australia, New Zealand, USA, Canada, China, Japan, Mexico and Singapore. Each country has a Peppol authority. For example, in Australia that's the Australian Tax Office (ATO). Is Peppol already in use? Yes it is. For example, the SuperStream system in Australia-which many businesses are currently using to automate the payment of employee superannuation contributions-is based on the Peppol protocol. How does e-invoicing work? The system connects the accounting systems of all businesses and government departments via the secure Peppol network.  Suppliers generate sales invoices in their accounting systems which are sent to Peppol.

Company Director? Why You Need to Apply for Your DIN

By Andrew Stubbs • 04 May, 2022
If you're a director of an Australian company-or you plan to be-take 5 minutes now to read this article. All existing directors (and intending directors) of Australian companies need to be aware that the Australian Government has announced the introduction of a new mandatory Director Identification Number (DIN) system. (You'll notice the term director ID is also used for DIN.) This system is the initial step in the Modernising Business Registry (MBR) Program which has been established under the Treasury Laws Amendment Act which was legislated by the Australian Government in 2020. More information on the MBR program can be found here . What is the DIN system trying to achieve? The DIN aims to provide accountability and traceability of a director's relationships over time, across all companies and will provide information on a director's involvement in what may be repeated unlawful activity, including illegal phoenix activity. It should also solve the problem of false or fraudulent director identities. What are the key features? It is mandatory for all directors, foreign directors and alternate directors of Australian companies to hold a DIN. The DIN is a unique 15 digit number. The first 3 digits will be 036 which is the identifier for Australia. The last digit is a check digit to help with accuracy when quoting your DIN. Like your tax file number, you will only be issued with one DIN which you will hold for life - even if you cease acting as a director for any period. To obtain a DIN, you will need to prove your identity so you will not be able to hold multiple DINs. Other office holders (e.g. company secretaries) are not required to register. The director is responsible for updating the DIN records for any changes in personal information within 7 days of the change. The director must apply personally. The process cannot be completed by your accountant, lawyer, spouse or executive assistant. There are significant penalties for non-compliance. How do you apply for a DIN? Directors have 3 options for applying. You can apply online from 1 November 2021. To use this method, you must first establish your identity via myGovID (an app you download on your smart device which is different from myGov). Once set up, your myGovID will make accessing a wide range of government services easier. (It's not just for your DIN application). For information on how to set up a myGovID please go to https://www.mygovid.gov.au/set-up During the DIN application process, you will need additional information such as your tax file number (TFN) and your residential address as per ATO records. It would also be advisable to have other personal details such as bank account details, medicare card or a recent income tax assessment available in case these are required. You can also apply by phone ( 13 62 50 ). During the call, the operator will ask for the identity documents you would have used to obtain your myGovID (passport and driver licence) as well as the additional information listed above. These details will be confirmed with the records held on existing government databases and, assuming the details agree, your DIN will be issued. Or you can apply by mail, but this is not recommended because the process for doing this seems vague ("Write to us") which means you can probably expect a lengthy process of certifying documents and coping with the vagaries of the postal system. One of the other two methods would be a better choice. When will you need to apply for a DIN? Transitional arrangements will allow directors to become familiar with the new requirement. When you need to have a director ID will depend on when you were appointed as a director.

7 Best Practices for Setting Your Small Business on the Success Track

By Andrew Stubbs • 07 Apr, 2022
If you're a small business owner, you're always on the lookout for better ways to go about routine tasks to boost growth and underpin reliability. So, yes, you have the will; now, what are the ways? What are those consistent routines you can instill that will have the most benefits? This article looks at the top 6 things you can do to help your business thrive. We're going to cover finances, goals, marketing, technology and you ! So, let's take a look… 1. Your finances are a scorecard … and a predictor Boil it all down and dollars in the bank are the report card on the health of your business operations. Surprising then that so many people don't really pay much attention to how much they've earned, nor how much they're likely to earn. As much as it might feel like a chore, reviewing your sales and financial projections and then using them to ascertain if you need business financing is a discipline worth cultivating . If you suspect that your cash flow is precarious, you should be checking out your options today. First metric to check: your credit score. If it is too low, you need to take steps to shore it up. Next, check in with your bank or finance broker about what loans are available. 2. Goal setting, goal achieving, goal celebrating So, if you're using current and future dollars in the bank to keep score, the next thing is to do something about it. This is where goal setting comes in. If thoughtfully set and persistently pursued, goals help you orientate your willpower and your energy at each moment of the business day. This is the hidden power of goals: giving you a good sense of direction and a way to channel your instincts towards wise objectives. Constantly checking in with your goals makes them a benchmarking tool to keep your business pointed in the right direction. Yes, just having goals helps. Actually achieving a goal helps too, of course! 3. Increasing the impact of your marketing Marketing is not magic. It is not a mystery. It is not an art. However, many less-than-reputable marketers will try to claim that it is. They do so to gain wiggle room to pad their invoices and cover up their lack of skill. What this means is that it is easy to waste money on ineffective marketing. The good news is that there are many low-budget marketing strategies that actually work to help grow your brand and reputation. Scout around on the internet and choose one or two new tactics. Deploy them and test them. If they work, double down. If they don't, try something else. If you can't tell if they're working, also try something else. Social media is the obvious starting place for these low-stakes experiments and the old classics of LinkedIn, Facebook and Twitter are where to trial them. 4. Bringing your business up to date technologically The ability of modern productivity and project-management tools to give small players the same capabilities as the big boys simply cannot be ignored. Harness them properly and they'll let your small businesses operate with the same productivity as the titans of your sector. And, if your business is in the services sector, the increased controls that business technologies can yield also lets you be highly agile - that's something the big boys can't do. So, ask yourself: are you taking full advantage of what's out there? Don't worry, the answer to this question is always 'no' - the field is simply moving too fast for anyone to be able to take full advantage. However, if you have a realistic view of your needs, then you have a yardstick to help assess all the solutions out there. When you know what you need the technology to do, then you can wisely choose what hardware, software, platforms and techniques to introduce. 5. SEO has changed and it is going to change again Google - indeed all platforms offering broad search functions, from Youtube to Facebook - are constantly altering and optimising their algorithms. This, in turn, means SEO practice must constantly evolve to keep pace. So, if your SEO approach hasn't been overhauled in a few years, the time has come to give it some attention. Do a review of best practice and score how you cater to SEO in your online presences. Yet, because the underlying concept of SEO has not changed, the corrective actions you need to take may not be major. Then again, they might be! It is better to know unpleasant news sooner than outright bad news later. 6. Download the right new apps The remote work trend has gone mega and this means mobile productivity apps are very much of-the-moment. See, you can get a surprising amount done with just your phone and tablet. And apps are how it all happens … plus connectivity and a full battery, of course! Usually, apps are best for keeping an eye on things, boosting effectiveness on the "busy" tasks and enabling you to give your stamp of approval to work that needs your say-so to progress. In general, these are not value-adding tasks, just the value-neutral tasks that get in the way of the value-adding tasks. Now, there is no end of apps out there. So, as always, don't bother looking until you have some idea of what you need. 7. You are the ultimate business tool Health is the single most important aspect to consider for anyone running a business. It's the non-negotiable factor that governs everything else you are capable of. To adapt a quote from Arnold Schwarzenegger, being fit and healthy is "a status symbol. It reflects you worked hard for it; no money can buy it. You cannot borrow it, you cannot inherit it, you cannot steal it". This means that you must get enough sleep every night (most people need 7 hours or more). This means a healthy diet must become your preferred way of eating. This means that you should exercise every single day (except when sick). This means you must give your mind a rest too . Meditation isn't some mystic monkish thing, it's simply the practice of letting your thoughts come and go while you - the observer - stay peaceful and undisturbed by them. Think of it like this, meditating is mediating your mind. Take stock, choose wisely, make small steps in the right direction In this article, we've talked about some improvements you can make to what you're already doing. You don't have to do all of these at once. Start with the one that seems easiest and then stick with it to see if it works. Remember, it's not always about big changes. Often, you can make major improvements in outcome by making small changes to input. Doing the little things better. So take stock, choose wisely and be sure to make those small steps in the right direction for success today, tomorrow and the next day.
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