Blaise Brosnan Discusses Business Survival During C0VlD-19

[Andy Black]

I quote Blaise Brosnan a lot and I've attended a couple of his paid courses over the past 10 years.

I'll watch this later but knowing Blaise I'm happy to share it unseen.



EDIT: Just watched/listened to it. Great stuff as expected.

Example: Someone asked if/when they should chase up on people who owe them money. Blaise's response (paraphrased) was that:

1. The crying child gets the milk.
2. It's your money, just in the wrong account.
3. Don't be apologetic.

View: https://www.youtube.com/watch?v=OsgkGvtP_Vg

 

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[Bekit]

Thanks for the share, Andy! From other things you've shared by Blaise, I knew this would be good. I've only listened to the first 30 minutes so far, but it's really valuable stuff.

Fair warning for anyone else who plays this video: During the first couple of minutes, this video was almost impossible to listen to, between poor sound quality, lots of unmuted participants on zoom, and Blaise's unfamiliar accent. But if you get past that rough beginning, you'll be rewarded with good advice.

Here are my notes:

The future projects life, the past just shadows.

People who understood where they were in the cycle better preserved whatever resources they had in the balance sheet. They were the companies that tended to come out best in the end.

There’s a big difference with this recession and the others. I looked at the 1929, 1999 the IT bust, and 2007-2008 – very interesting to look at what happened during those recessions. The stock market in each of those periods dropped 52% over a _ month period. But if you look at this time, the stock market has dropped 36% over 18 days. It’s 18 days vs 18 months. The cycle is different this time.

Cycles move on.

Using the quotation there from Eileen Gray, “The future projects life, the past just shadows.”

There should be a bit of light for us there. This will bottom out. We will look back on it.



We have the responsibility to ensure that our business is alive at the end of this cycle. Based on the experience of the past, you have to preserve your working capital. There’s no quicker way to go out of business than to run out of cash. It’s not easy, but you have to cut costs deep and do ti today. You need to preserve your working capital.

Take out your Profit-loss account, take each line item, e.g. sales, cost of sales, and say, “What can I do there?” Can I turn raw material in stock into money? Every percentage you improve will ultimately help.

The background to my thinking is that a business is a pragmatic thing. The market at a moment in time doesn’t care about any of us individually. But the market ultimately is a good boss. Because the market will always pay you based on outcomes. So if you’re looking to people around you that make pragmatic business decisions (use their head) – we have to use our head a little bit more. In one of the books that we referred to, a quotation: “When you’re in business, you have to use your head. And when you’re at home, use your heart. Not the other way around.”

If you use too much of your heart at work, you’re not going to be very successful in business. Be very careful that you don’t mix those two.

Line items from Profit-Loss account:



Convert raw material into a sale as quickly as possible.

Payroll – a percentage of your sale – it may be a very big percentage if you are a big business. Optimise the layoff scheme from the state.

Other items if you come down and look at the other headings in your P/L, take them out individually and interrogate it.

Set a target for yourself: Could I as a business person be 2-3% better under each of these line items? You’ll finish with a slicker, fitter operation. You’ll have a better business.

It’s all about converting anywhere money is tied up.

The places you’d go looking for money:
Debtors
Work in Progress
Stock

We should use the current environment as an opportunity to get better at these things, come up with a plan.

Meeting with a beauty salon owner; focused in on her virtual selling. She’s not going to put reps back on the road anymore. She always knew she would do this, but Covid 19 forced her hand. There’s always a silver lining to be got from these things.

Another business going through their factory and using the LEAN system to re-clarify their processes, come up with formulas & templates that will help them to be more efficient. People using the lockdown to enhance the business model going forward. We’re all in business. None of our business is so efficient and so 100% perfect that there are no opportunities to sharpen up.

If you do that, you’ll get a good return back on the investment of this downtime in your business.

Be careful in the rush of trying to get product out. Make sure that you’re at the right price and that you’re going to get paid for it. No quicker way to go out of business than to run out of cash.

Why did they run out of money? They were in such a rush to help everybody, they forgot about themselves.

Even if you’re in that unique situation where your sales went up, make sure that you’re getting paid.



You might have a problem with this priority list. You might put you and your family #1.

But you need to have your business up and trading as fast as possible. It’s going to be far faster to restart than for someone to start from scratch.

Optimize the systems. Be careful. I know years ago we were advised not to be selfish. You have to be selfish in this kind of thing. It’s good to satisfy and contribute, but you have to have a business at the end of it. If not, your contribution to society will be diminished.



By the time the herd arrives, it’s generally too late.

If you’re part of the herd, you can never get any further than the herd.

You need to be commercially selfish and professional for your own business. If your business is commercially viable at the end of it, you’ll make a far bigger contribution.



I don’t think that the period we’re going through at the moment is the worst period. I’d be more worried about June, July, August.

If you’d taken March-April period, the sales here you created in Feb-March. The revenue for that was come in through collections. But you get back trading in May sometime, and you’re swelling on credit, it will be slow building up revenue, but you’ll have your overheads return. Be careful about starting at full blast. It’s going to take a couple weeks to build back up. Be very careful not to take on additional costs. Bring the employees back as your revenue builds up. Don’t put yourself at risk that your overheads run you out of cash.

You have to assume that gov/revenue/bank supports will be withdrawn.

The supports will be reduced. Be careful in that scenario.



Example of a business I was dealing with a couple of days ago – looking at it from a working capital perspective, they had revenue of 40,000. To 10,000 in April, to 2,000 in May.

They’re cash neutral in April. They have a deficit of $3,000 in May – and they still have 5,000 going out.

There’s a deficit, which reduces their reserves.

I’ve projected that forward to June, July, and August, and that company, as it stands at the moment, is very likely to run out of money by July.

If they don’t get reserves, facilities in the bank, grants, if they don’t get help, that business could easily go bust. Because it just runs out of money.

You have to look at your own business. You should be doing a cash flow statement for the next number of weeks.

Cash flow statement, let’s say for 4-5 weeks, when a week is finished, add another week. You don’t need to be an accountant to do this. It’s just money in and money out.

You’ll have to have overheads that kick in. Day-to-day financing needs to kick in. You have to preserve whatever cash is in the business.

That’s my strong advice.

Will we get out of this? Of course we’ll get out of this. The cycle moves on.

The severity depends on how long it will last. If we can get going may-June and build up momentum from Sept-December, I think most businesses will have a fair chance of getting back up and being ok. There will be casualties. But there will also be some what we call “convenient casualties.” A business had planned to go into liquidation about 2 weeks before Covid came. They were shy about doing it because of publicity. Now they’re using the Covid label just to stop. You’ll have a few convenient receiverships/liquidations as well. Not every business needs to go out of business.

Any questions?

I have a large number of debtors. They’re good payers typically. When should we start requesting balances? When is the right time? Should we start having those hard conversations now?

There’s an old saying out there that the crying child gets the milk. Apply that to debtor collection. Every company will be trying to push out and ignore debtor payments as much as possible. But you have to look after your business. In order to support your working capital, you need to collect the debt. If you shout louder, you’re likely to collect the debt. The debt is your money. It’s just in the wrong bank account. So don’t be shy about collecting your money. Keep away from legal, but be very proactive at collecting your debts. And don’t be apologetic about it. The heart would say we shouldn’t be pushing things too hard in this period. But if you look about survival and try to manage your cash flow, you don’t have a choice but to go after it. Don’t be timid about it. Go after it a bit more seiriously than somebody else.

Would you use pension funds?

Preserve cash. If pension is being paid through the company, preserve the cash within the business by every means possible. The question – should I stop the pension. Don’t stop it. There’s a difference between deferring something and stop it. With deferral, at least you have money coming in in order to kick start these payments. When you keep taking water out, the water gets depleted very quickly. Every deferral allowed at the moment should be optimized, even if the company appears to have enough money in the immediate future. The projection – it’s July – Augustu – September that are going to be the critical moments.

When you talk about bringing back staff, do you wait for the government to give the directive?

Whenever you go back to the business, it’s going to be slow enough, it’s going to be a couple weeks to get up to speed again. Be very careful you’re not taking on all the overheads on day 1, because you wont’ have revenue on day 1. A business that plans to open May 6, they reckon they won’t get a call for business for 3-4 weeks. Being a good business person, he understands that he’s only going to incur the overhead. And the payroll is part of that. Your heart will tell you, “Take everybody back on day 1,” but your head has to tell you that revenue has to match costs.

[Notes take you through about 33:00]

 

[Sethamus]

@Bekit between the summit thread and stuff like this, a guy could really fall in love with your notes lol. If you have not been told we TRULY appreciate it when you contribute like this.

 

[Andy Black]

@Bekit ... I’ve no idea how you write such thorough notes. Thank you so much for writing this up!

 

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[Bekit]

@Bekit ... I’ve no idea how you write such thorough notes. Thank you so much for writing this up!

Simple. I type almost as fast as people speak. AND I get a lot more out of what I'm listening to if I take notes this way.

I developed this ability in college, because I would sit in class and get so bored from the slow pace that the lecturer was teaching that at the end of the class I would find myself wanting to sprint away really fast and scream out my pent-up frustration. So instead of making myself into a freak, I decided to challenge myself by typing every single word, um, uh, false start, and vocal utterance that I heard. It gave me something to do other than focus on how bored and frustrated I was. It made it so I didn't want to run away screaming after class.


So it doesn't take me any more time to write the notes than to just listen to the session, and it increases my ability to take away value from the session and remember what was said so that I can think about it later.

It's a win for me and it's a win for others who might not have time to listen to the whole thing but who can quickly scan through the notes and pick up something of value (or decide that they want to invest the time in listening).

Happy to share!

Thanks for the great video, @Andy Black !