I remember that when I was a teenager at boarding school, my roommate and I used to spend hours (usually during study-time) daydreaming about how great we would have been if we were part of the great pioneers discovering and developing new countries and civilizations.
Many years later I have that feeling back. We are at the eve of rediscovering and redefining civilization as we knew it. The corona crisis certainly rocked a couple of boats, and we’ve been living through lockdowns that was four months ago not even imaginable. The great shift is still to come. But, as with all great changes, it will be accompanied by uncertain times.
I think that especially in the aesthetic industry, the way we do business and interact with clients will be greatly chanced by the end of the year. This creates so many opportunities ready for those who are willing to take them. With it, some opportunities we are currently exploring will disappear. As Darwin said: “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”
I think that cash will be one of the main factors in determining our survival or disappearance for the next six to twelve months. It is now the time to take a hard look at what it is that we are doing with our money. We will need money for two reasons; our survival and our contribution to developing a new economy.
When I say that it is time to take a hard look at what we’re doing with our money, I do not mean that we should just bluntly stop spending on everything. We need to spend on what will help us survive and then what will help us grow. I used to have this philosophy to spend 20% of my resources on preservation and 80% on growth. For the coming year I will be adjusting it to 40% preservation and 100% growth. This is not because the coronavirus affected my mathematical abilities, but because what used to be my best now has to become much better.
I propose that the first rule when looking at making payment should be: Do not do to others that you do not want others to do to you. Don’t just skip a payment for a service or product that was already provided if you find yourself in a financially difficult situation. Contact your supplier and try to arrange a new payment schedule to which you can commit. Remember that he or she relies on your payment the same way that you relay on your client’s payment. And without suppliers you will not have a business for much longer. It takes a lifetime to build a reputation and only a moment to destroy it. Think long-term in very decisions you have to take, even if it is to fix a short-term problem.
If you are in the position to fulfil your immediate obligations, but have to cut back to ensure you remain in this beneficial position, look at what luxury spending you currently have. Try to eliminate all luxury spending as soon as possible. Look at your debit orders and auto payments. Which of those payments have you forgotten about, which can be stopped immediately.
Make a list of payments that can be delayed without penalties, but remember these payments still need to be made at some point in time and remember the first rule.
Apply the 80/20 rule on your stock. Which 80% of stock you carry only brings in 20% of your turnover and try to get rid of this as soon as you can. Run a lockdown promotion and convert as much of your stock into cash as you can. Especially products with a best before date.
Apply the 80/20 rule to your client list and over commit yourself to the 20% of clients that brings in 80% of your business. What I mean with this is that you make sure, within reason, that you do not lose them to a competitor. You will need them to get you through this.
Of the 80% that brings in 20%, look for those clients who have not benefited your business, but only drained your resources and get rid of them as fast as you can.
Take the time to learn the 80/20 rule, also known as the Pareto principle. This way of thinking will become very important in your decisions on allocating resources. I want to end this article with one last thought: We need to be prepared for the unknown to the best of our abilities, but that does not mean that we have to live in fear the whole time. Prepare as good as you can, but don’t let anything take you out of your flow.
