By Nigel Fellowes-Freeman
The February reporting season ended on the marginally optimistic note of “better than feared” according to those in the know.
The UBS equity strategists said more companies beat expectations. But for the average business, or startup, does this mean a sigh of relief?
Probably not.
No one missed Dick Smith’s collapse, or Qantas’s surprise profit. Likewise, we all saw Commonwealth Bank post yet another record profit.
Startup founders don’t always consider the peaks and troughs of the ASX 100 as relevant to their business, unless they own shares.
But maybe they should.
The thing is, beyond these headlines there’s a lot to learn no matter how many staff you employ or what revenue you turn over.
There’s a reason that the top end of town pays the big bucks and it’s because these men and women understand business. In reporting season, a lot of the how and why is laid bare for the public to see.
Working in a startup you don’t have the same public scrutiny on your business, though you may well face pressure from investors.
Here’s what we’ve learned from looking at the big end of town this last month.
It was a huge surprise when Qantas announced a record profit of close to $1 billion. A happy story you’d think but this was also at the cost of many jobs.
A business must make tough decisions when needed and cutting staff to save the company is an unfortunate reality.
But where we really learnt from Australia’s biggest airline was in the details.
The company is saving money through adding seats, flying less and planes spending less time on the ground. Simple, but it’s these everyday tasks that can cost a business a huge amount over the longterm.
Even the big guys can fail. Dick Smith entered voluntary administration just over two years after a $520 million dollar float.
When things appear from the outside too good to be true, they often are. The collapse is a complicated issue but it partly comes down to understanding core financial statements; the profit and loss statement, balance sheet and cash flow statements.
The lesson here is twofold.
Cash flow is king; a business fundamental that remains true no matter what size the business. In short, if you don’t have the cash in the bank it’s game over.
The second is that if you are investing, looking for a new partnership, or even supplier, don’t just trust your fund manager or the referring partner. Do some research yourself and understand the fundamentals of the business you are getting involved with – or you could end up like the investors in Dick Smith.
Bluescope Steel had to make some hard decisions to protect more than 5000 jobs in the long term.
There was a lot to learn from Bluescope Steel and how they negotiated with their staff and helped them believe in their long-term vision. In short, be open and honest and they may be able to help with changes to their pay or in other ways.
Bluescope were also an example in the need to constantly focus on your core business. They kept communication open with the Australian Tax Office, which yielded a way around some cash flow issues. It’s a good lesson that the major institutions government and private are not always out to get you.
A darling of the Aussie stock market, Domino’s relentless rise continued. It dropped the “pizza” from its name, forecast the death of the drive through and is using digital technology to speed up home delivery services.
Domino’s is not a traditionally tech focussed business, but it seems the “tech” umbrella is growing increasingly wider.
It’s true that some smaller businesses can still function largely without need for much more than a pen and paper, but there’s a large difference between carrying on and just being smarter.
Domino’s is a great example of internal innovation and other businesses can speed up their process, cut costs on bills and save the invaluable commodity of time, often by something as simple as signing up to a website.
Nigel Fellowes-Freeman is the founder of Expense Check, a comparison marketplace for small businesses to connect with the right supplier at the best price in under seven minutes.
This article was first published on StartUpSmart. Follow StartupSmart on Facebook, Twitter, LinkedIn and Soundcloud.
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