There is no denying that COVID 19 has been particularly difficult for small business owners. With forced lockdowns and tightened restrictions to prevent the spread of the pandemic, many small business owners have had to dig deep in order to overcome these challenges and stay afloat. Today, I want to shine a spotlight on a fantastic retail business in Brisbane Australia that has not only survived, but literally thrived despite the global pandemic.
I want to welcome Jennah Grimsey to the show representing Vault Entertainment Pty Ltd. (Vault Games), located at – Lower Ground, 62 Queen Street, right in the heart of the city in Brisbane, Australia. Jennah is in partnership with her husband Dylan Shearer and their mutual friend Cassandra Varian.
Financial Foreplay® Highlights:
1. More sales often does not fix cash flow problems, in fact, it can make them much worse
2. High growth periods will highlight cash flow and working capital problems very quickly
3. Less than 30 days of cash reserves in the bank to deal with an emergency is very unsafe
a. Businesses should strive to have 4-6 months of cash reserves in the bank
4. Top 3 lessons learned from coaching
a. Cash flow is the #1 metric + you need to have enough working capital to fund the operating cycle and growth
b. It never makes sense to drop prices in retail just for the sake of driving high volumes of sales (i.e. Black Friday sales)
c. Supplier terms are critical – often an extra 2-3 weeks to pay is much more valuable than a discount on price
5. Bank lending is very difficult for small businesses to get even with the government backed guarantees offered during COVID19
a. Non-bank lenders are much more flexible and approve loans more quickly but the trade-off is higher interest rates which much be factored into your costs
b. Paypal is roughly 14% and Prospa offers a 24% interest rate – you need to adjust your business model to ensure you can cover these additional costs of doing business
6. Top 3 impacts on Vault Games from having a coach during the past 12 months
a. Net profit margin increased from 0.5% to 13%
b. Cash flow up 750% with 2.5 months cash buffer in the bank for emergencies (and working towards 4 months of cash buffer)
i. Allowed business to expand by moving to larger premises and pay for all leasehold improvement and fitouts with cash
c. Took first fully paid vacation as owners (in four years of operations)
Do You Need Some Help to Get Your Cash Flow & Business Turned Around?
For those of you who are listening to this podcast and thinking “hey that is exactly where I’m in my business and I could use some help to boost my cash flow and also put more systems in place so that my business works without me”, please know that help is available if you are open to learning and willing to do the work.
Reach out now to speak with Rhondalynn about your suitability and readiness for coaching:
Apple is putting the finishing touches on a service that will let consumers pay for any Apple Pay purchase in instalments over time – which is a direct foray into the “buy now, pay later” market where key players such as Paypal, Klarna, Zip and Afterpay have dominated.
This new Apple service will be backed by Goldman Sachs as the lender for the loans that support the instalments.
This new buy now, pay later system could further drive and entrench Apple Pay adoption. Even more importantly, it’s likely to influence more consumers to use their iPhone to pay for items instead of standard credit cards. This is a huge shift since recent studies out of the UK estimate that BNPL took a 20% chunk out of the credit card market during the 2020 Christmas shopping season.
As I understand it - when a consumer makes a purchase via Apple Pay on any Apple device, they will have the option to:
· pay for it in four interest-free payments made every two weeks, or
· spread the payments across several months with interest
Consumers will be able to choose any credit card to make their re-payments over time which will add another 30 days to the equation.
Now you may be asking yourself, why is this so significant?
Apple's announcement isn't significant because of its direct impact on the BNPL landscape. It is significant because it proves the structures of banking and finance are fundamentally changing. This week alone we saw irrefutable evidence that banking as we know it is dying and that the rigid foundations that have propped up our banks, are no longer rigid at all.
The recent acquisition of Afterpay as a prime example of this. Afterpay has NEVER made a profit. Afterpay has no history of paying dividends to shareholders and has less than $1 billion in net assets on its Balance Sheet. And yet, it was acquired for an implied $39 billion by Square, with Afterpay shareholders set to pocket Square shares instead of cash... where Square shares on this transaction were aggressively priced at 120 times forward earnings!
Bio:
Kane Jackson is the Founder and CEO of Maslow, a financial services start-up with a
goal to rebuild consumer banking and finance on a platform of inclusivity and
alignment with the consumers it serves and has, at times, previously taken for
granted. Maslow has the backing of a number of significant investors, including the ex CEO of PWC and Carlton Football Club President.
Financial Foreplay® Highlights:
1. Significant increase in bad debts likely led to need to source an acquisition partner
2. BNPL is predicated not on the 6 per cent return but the fact that capital is recycled 3-4 times a year making the annual return earned in the 30 per cent range
3. BNPL model is built upon the assumption they would be able to upsell customers into traditional banking products – the jury is still out on whether that is realistic or not
4. Banks were never really worried about BNPL because it only affected a small portion of their revenue base
5. Apple’s proposition is risky because it completely removes friction AND conscious consideration by the customer of what the bank does (and whether they even need a bank in their lives)
6. Questions for us to ponder -- How could we harness what we have learned from BNPL to innovate in the area of savings, investing etc.? How could we teach people to manage their money more wisely and make it fun/engaging?
Get in Touch:
Linkedin - Kane Jackson | LinkedIn
Running a business is challenging on many fronts not the least of which is that you have put your finances at risk to fund it. That is why it makes sense to proactively manage risk, reduce uncertainty and protect your livelihood wherever possible.
Business insurance is one of those areas that is not often talked about. There are plenty of courses on social media marketing, leadership, even financial literacy... but surprisingly very few on how to protect the key assets you need to stay in business, deal with disasters (manmade or natural) and the human beings you interact with every day in your business.
Think about how you would manage if your stock, employees, equipment, or even your place of business was badly damaged or destroyed?
Would you be able to continue? Could you recover financially based on savings you have on hand right now?
Insurance is about peace of mind. However, you have to know what to insure and how much to insure it for... that is where it makes sense to speak to someone that you can trust.
Bio:
Lisa Carter is an award-winning adviser with over 25 years of experience in the insurance industry. Following an 11-year career with an international insurance broking firm Lisa identified a market gap stepping away to start Clear Insurance in 2010.
Lisa is a master at building long-term client relationships - she specialises in custom insurance and risk programs for complicated and hard to place accounts. She has delivered some very unique solutions for the construction, hospitality, medical and tech-startup industries.
Financial Foreplay® Highlights:
1. Before COVID hit we were already in a hard market cycle for insurance – meaning companies had started to restrict cover and premiums were up
2. In terms of under-insurance, business interruption and public liability are the two areas where businesses are most exposed right now
3. Insurers are now demanding a much higher level of preparedness in terms of risk planning and cyber risk management strategies
4. Almost every business (whether you are selling online or not) now has a serious risk of exposure to cyber crime as many of these are driven by social engineering and can infiltrate your business via your email and/or accounts department
5. The new legislation in place to force timely reporting to government of all breaches is quite strict and most businesses will fall under these provisions because the definition of sensitive data captures more than it ever has in the past
6. Management liability isn’t just for big businesses that have a formal Board of directors – as a director, you are already on the hook for decisions made or losses that affect third parties and you should be carrying insurance to protect against the risks
Get in Contact:
Linked in - Lisa Carter | LinkedIn