Matt's Frequency Series (Opinion) - The First Duty of Every Business is to Survive

The First Duty of Every Business is to Survive.

One of my University lecturers was a hard-bitten Australian professor. He asked my fresh-faced third year finance class what we thought the first duty of every business was. We gave him the usual suspects like profit, do good etc which he cheerfully batted away. He lowered his head, stared at us fixedly and let us know that the first duty of every business… is to survive.  That’s pretty good advice and worth repeating.

We face wider choices about where we spend our money now that we are allowed out!
The wider choice is also about spending money on the places we want to survive.
That means supporting local businesses and encouraging others to do so as well!

Lockdown raises the serious issue of survival for many retailers. The business model has high fixed costs including rent and labour. If you are not selling, there is no cash or gross profit being generated to cover those high fixed costs. Tough times. It will be little comfort to know there are others in a worse situation in Auckland. Regrettably not everyone will have the cash resources, or even perhaps the optimism, to get to the other side.

So as you walk around town, or even when shopping online, do give a thought to supporting the businesses you want to survive.

Do I go to this café or that one?

Do I shop at this diary / supermarket or that one?

Which investment platforms do I support?

Which news channels do I continue to subscribe to?

Do I go to an international show or a local theatre production? (OK, just kidding)

Which charities do I continue to support?

Here in Wellington we are coming out of the lockdown. It is still quite different though. We have to wear masks and the local eateries aren’t handing out the local paper to read over a morning coffee…

The middle of town is still very quiet. A few retail tenancies have closed down. There seem to be fresh volunteers to take on the leases on most of the ones around our offices It will be interesting to see what sorts of places are going to pop up. We already know some landlords are being very pragmatic about keeping their tenants. I guess over time we will also hear in the usual roundabout manner what sort of deals are being done to secure fresh tenants.

To restate, the first duty of every business is to survive.

Survival has been a bit of a challenge for many businesses in the last 18 months. It has been rewarding to see how resourceful some of our clients are. It has given new meaning to the old saying that where there is life there is hope.  

When it comes to survival, the key is cashflow. Our key metric when working through survival was always how-many-months-expenses-do-you-already-have-in-the-bank. That quickly tells you how urgent things are. It can also just as quickly put you at ease.

Then you can look at how you increase that measure. Here are some thought starters.

Maybe this is the time to take up some of the finance offerings around products. Maybe it is time to move to payment in advance for some services offered to customers. Are there a few services around the edges of your business that don’t add a lot of value? What new products does this opportunity give you?  Are some of your clients slow payers? Maybe you can redirect your energies elsewhere.

So ask yourself what it is about your business that makes you the one people want to support? And how do you reinforce that choice / remind people about that?

Good luck with choosing where to spend your money and attracting that sales dollar to your business!

Please do contact us today if you would like assistance with adapting your business, increasing your sales, or remodelling the customer experience in using your businesses services.