With the Covid-19, I’m sure you are doing whatever it takes to keep your business going through these unprecedented times and more importantly keep you, your family and staff safe.
Take a deep breath. You are doing well.
Covid-19 will last a few months (if we all do the right thing), and it will pass. I'm basing this on the latest Mckinsey report. Governments will be coming to the rescue in all countries because this downturn is more harsh than the global financial crisis in 2008/09. What does a rescue mean?
According to Hamish Douglass ( who is Australia's version of Warren Buffet), stimulus packages in the vicinity of ~30% of GDP globally. In Australia, this will be equivalent to $400B and in the US, we are looking at $6T.
In the meantime, we are seeing a massive shock to consumption behaviour, the stock market – and your business! Especially for quick service retail and dining environments.
From a long term plant-based perspective, Covid-19 will benefit the growth of plant-based, especially in China and South East Asia.
There are 3 steps to come out stronger from what we are seeing:
1 - Preserve as much cash as you can
2 - Adapt
3 - Double down - invest in positioning your business for growth.
Preserve as Much Cash As You Can
- If you have a loan from the bank, speak to your bank. Tell them your circumstances you are facing. Ask to freeze or defer all payments. They may have access to your bank data. They will likely to have funding from the federal government in your country to support them. **
- Do write a letter to your landlord to explain the circumstances – ask for a 3 month rent reduction and aiming to extend this to 6 months. If they have a mortgage, you can share that banks in Australia (
Macquarie, St George, NAB) are providing support because of hardship. **In Australia, a moratorium was passed on the 7th of April to assist small businesses. If you have a annual turnover less than $50M and eligible for Job-keeper program, you can request to reduce your rent and have a part of it deferred.**
- Do keep the good staff – on reduced hours.**On March 24th,
- When the global financial crisis happened, the many US companies downsized by firing staff. The German companies reduced hours for all their staff and kept the good ones. Try following the German approach.
- Do reduce all unnecessary variable costs.
- DO make payments to your suppliers - after all they are probably struggling too.
- DO collect cash on delivery with wholesale sales, so you are promptly paid.
The Chinese Word For Crisis is the same as Opportunity
Adapt - See the Opportunity
Quick Service Retail
People love your product – but they need to access it. Australia Post deliveries are not slowing, Sumo Salad has seen a 23% rise in delivered meals in the last few weeks. Many offices are sending staff home – so this will depend on your location. (Current as of 16/03/2020)
I) Offer take away only with touchless contact with staff. Great examples here by Shift Eatery in Sydney. They are using only take away platform Hey You for customers to pre-order. As we eventually come out of Covid-19, this practice is likely to remain for some time.
II) Incentivise people to buy from you directly – and dedicate a staff member for deliveries, less than 5kms. (You have to do the numbers to test these assumptions). See example from Eden in Bondi. The better platforms charge less than 5% of the order like Mobi2Go
III) Or boost your online offering, either through existing channels (Ubereats/Menulog/Deliveroo/Doordash) – This is not ideal because of the hefty charge by these companies. If you change your operation to almost a 'dark kitchen' - this could work.
It’s worth using until you ready your business for direct online. Note Door Dash has 30 days commission free!
IV) Wholesale offering – Speak to your customers to see if they prefer bulk buys. Then create products in bulk and allow them to purchase this from your store – or drop off.
V) Collaborative partnerships with other businesses – You have a fan base, and so does the other business. Together you can create a special evening or pick up take away event. There are many success stories with savoury and sweet companies coming together. In Sydney, see Treat Dreams and I Should Be Souvlaki. In Melbourne, @smithandeli (plant-based delicatessen) are collaborating with a Northside Fruit and Veg.
Consumer Packaged Goods without the major outlets
I) Create a online Shopify/Square store.
III) Collaborative partnerships with other existing shopfront businesses – Your business has fans, and so does the other company. Doubling the traffic helps.
Wholesale Businesses (selling through cafes)
I) Create a Shopify Store (see above)
II) Encourage larger purchases with special deals
III) Easter is not going away – people will be stocking up bakery items for Easter & they may not want to go to the shopping mall.
IV) If you have a factory - which looks good enough. You can open up a factory shop – like The Cheesecake shop - with strict hygiene conditions.
For Chefs & Specialised Service
Create a special offer to cook at peoples homes for the week. There is a massive need for this service – especially now.
Thrive & Invest in Your Business Growth.
Plant-based food will accelerate further after Covid-19.
- China is importing US brand Just Egg for the first time ever.
- Brands like Beyond & Impossible are unlikely to be imported into China direct market because they have their own plant-based brands. However, this presents an opportunity for Australian brands.
- China has stopped wildlife trade, with 20,000 farms shutting down. Vietnam is likely to follow.
- Slowly but surely people are starting realise the causal links between animal protein and human health.
- Even in Australia, sales of fruit and vegetables has risen sharply in the last few weeks.
After speaking to hundreds of plant-based business owners, many wanted to pause and review the business as a whole. For those businesses, Covid-19 can be a blessing.
Once you have done steps 1 & 2, you are ready to look at your business with fresh eyes.
Where does your business sit in the 5 stages of the business life cycle?
Do you have new opportunities available to you in new channels?
The following video goes through the three step process of where and how you would like to continue your business. The colour is dark, but the content is gold! 😊
We trust this has been helpful. If you have anything more to add, please contact me at bob [at]purposewithprofit.co to update this page. We'll be updating this page regularly as a guide.
We wish you, your family and staff a safe passage through the other side of Covid-19.