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Employer Insights

Should We All Fear the Walking Dead?

As part of people2people’s ‘expert series’, we have invited debt management specialist Angela McDonald as a guest blogger to provide some advice on how best to manage the concerning rise in ‘Zombie Businesses’. Angela is the Managing Director of Optimum Recoveries, a multi award-winning Australian-based company that specialises in B2B commercial debt prevention, management and recovery. Should we all fear the walking dead?Australia is known as ‘the small business nation’. In fact, our economy relies on the success of SMEs which make up around 80% of all Australian businesses. It’s no surprise that when COVID hit, the Government injected considerable financial assistance to keep small businesses operational and employing staff. While these temporary cash-stimulus measures have been a lifesaver in many cases, they’ve also caused the rise of ‘zombie companies’ – businesses that aren’t viable long-term and are only solvent because of this government financial assistance. Now that we’re in October, the Government has announced it is extending these temporary measures until the end of December 2020, and in some instances until March 2021. This may delay the inevitable business closures even further, placing creditors under a very real risk of trading with organisations that are technically insolvent. How many small businesses are at risk of insolvency?The Reserve Bank of Australia recently reported that up to 25% of small businesses would be at risk of insolvency if those cash subsidies ceased today. And Treasurer Josh Frydenberg has declared that small businesses are a particularly vulnerable group, admitting that some will not survive COVID-19. If you’re trading with customers or suppliers who are being falsely propped up by government stimulus packages, now is the time to swing into action and protect yourself from the ‘Walking Dead’. Unlike the popular Zombie series, we’ll never advocate the use of crossbows or firearms to be your weapons of choice! When it comes to business, prevention is always better than a cure, and there are some clever, simple prevention strategies you can implement now to protect your business. Optimum Recoveries’ Zombie Prevention Hitlist1. Be extra vigilant in all your dealings Don’t rush into agreeing to payment plans with your debtors without fact-checking their financial situation first. Register with a credit bureau and ask them to conduct a review of every one of your customers. They’ll send you automatic alerts of any worrying signs so you can act fast. Let us know if you need help.Keep talking to those you do business with – both your suppliers and customers. Regular and open communication can help you uncover any concerning issues before it’s too late. 2. Ensure your internal processes and terms are watertight Get expert assistance to review your current T&Cs, credit management processes and internal policies to make sure they give your business adequate protection in today’s economic climate.Optimum Recoveries can conduct a health check and identify any gaps that may leave you susceptible to hard-to-recover debt. What the latest Government proposed legislation means for SMEs?The Federal budget handed down on October 6 2020 seems geared to provide some much-needed tax relief to both businesses and individuals. This will hopefully encourage Australians to have the confidence to spend in the coming months, providing the financial support that businesses need to keep trading. Here are some key points impacting SMEs: Immediate asset purchases write-off: Any new asset acquired until 30 June 2020 will be eligible for a full tax deduction. The same will apply to second-hand assets, up to 30 June 2021. There is no dollar value limit to the deductions. Loss carry back: Businesses that have incurred tax losses in either FY2020/2021 or FY2021/2022, but have paid tax in FY2018/2019, can carry back the tax losses and be eligible for a refund of the tax paid in the earlier years. JobKeeper and JobMaker: JobKeeper payments look set to wind up at the end of March 2021. The new JobMaker system offers employees a subsidy for hiring new employees from 7 October 2020 to 6 October 2021, provided the new employees have previously received JobKeeper or similar. This is excellent news for P2P and any clients who have been holding off recruiting new team members! More stimulus measures: Spending initiatives are set to be introduced to kick start spending in a range of industries, particularly manufacturing, infrastructure, construction and research. In the current business environment that’s both challenging and changing, Optimum Recoveries can help your business remain viable and thriving. Talk to Angela via the details below, about how she can assist by tailoring robust systems and processes to keep the Zombies away from your door!Contact Angela McDonald and the team from Optimum RecoveriesP: 1300 556 937E: amcdonald@optimumrecoveries.com.auW: www.optimumrecoveries.com.au

Posted by Ben Wheeler | min read

Employer Insights

What is Humble Leadership? How Can It Take Your Business ...

James launched his mid size, Perth furniture business in 2015. The first three years saw a rapid increase in sales and profitability, but something wasn’t quite right in the last two years. There had been an increase in the number of customer complaints. Late deliveries, unfriendly customer service reps, lost sales opportunities and lost customers started to become a trend. Simply stated, James’ business was in trouble.So, James called his managers into a claustrophobic conference room, he wanted answers. "I depend on you people to make this business work!" he barked. "Sales are dropping like a rock, which obviously means someone's not doing their job. We're not leaving this room until I find out who it is!"No one speaks up. Everyone wants to crawl under their chair. James’ not getting answers, but what he doesn't know, is that the answer is right in front of him.What is humble leadership?James’ dictatorial leadership style might have worked when workers had few options and even fewer rights, but it clearly doesn't work now. The simple fact is that in the current employment landscape, workers who report to the "I know more than any of you" manager become resentful. They're less likely to be creative, resourceful or innovative—because in John's world, a mistake isn't a learning experience.That's why an increasing number of business leaders are adopting a new approach, called ‘Humble Leadership.’ Humble leaders recognise their own limitations. They understand that everyone, irrespective of their position within an organisation, have something to contribute.In How Humble Leadership Really Works, Harvard Business Review (HBR) explains how humble leaders (which they call "servant-leaders") develop their businesses by bringing out the best in their employees:"The key, then, is to help people feel purposeful, motivated, and energized so they can bring their best selves to work…To put it bluntly, servant-leaders have the humility, courage, and insight to admit that they can benefit from the expertise of others who have less power than them. They actively seek the ideas and unique contributions of the employees that they serve. This is how servant leaders create a culture of learning, and an atmosphere that encourages followers to become the very best they can."Why Does it Matter?It would be easy to dismiss James’ lack of leadership skills as little more than a source of discomfort for his workers, not something that fundamentally affects the bottom line. The fact is, almost half of employees who work for leaders like James (according to Forbes) are actively considering quitting. This ‘on average’ costs a business anywhere from 50% to 200% of an employee’s annual salary to replace them. What are the principal traits of Humble Leaders?Adopting a humble (ie, inspiring) leadership style, typically means higher employee engagement and increased productivity and profitability. For that reason, it's critically important to understand which traits characterise humble leaders. Although every business and every leader s different, generally, humble leaders share the following 5 traits:They recognise their own limitations: one of the main reasons for start up business failures, is leaders who think they can "do it all." From finances to IT to marketing, these leaders assume their leadership position makes them ‘al things to all people’. As a result, they tend to make costly mistakes that place their businesses in jeopardy. Humble leaders have the courage and self awareness to understand when and where they need guidance and advice, and they're not afraid to ask for it.They seek out talent in their workers: because humble leaders know what they don't know, they make a conscious effort to seek those skill sets in their employees. They're more likely to carefully assess employee skills at the time of hiring, and through ongoing performance evaluations. For this reason, they know to whom they can turn when they need help solving problems.They inspire their employees: workers want to perform at their optimal level when their manager acknowledges the contributions they have made. Humble leaders have no problem ‘sharing the spotlight’. This inspires employees to work collaboratively and give their very best to a team effort.They promote a culture of learning: because humble leaders can admit their own shortcomings, their employees are more likely to acknowledge gaps in their own skill sets. This inspires them to seek out training opportunities to advance their knowledge and their careers. Humble leaders are more likely to make those training and career opportunities available to their staff, promoting a culture of continual learning and improvement.They listen: the best leaders listen more than they talk. Their role in meetings, for example, tends to be that of a facilitator who articulates the nature of a problem, actively listens to attendees' solutions and guides the discussion to consensus. This ensures not only the best solution, but also the buy in necessary to implement change.ConclusionA humble leadership style could be argued, is about ‘doing the right thing,’ looking after workers and respecting their contributions. Effectively leveraged and implemented, humble leadership can be a game changer for your business, reducing employee attrition, while increasing productivity and profitability.