Now’s the time to dive deep into your clients’ businesses

As COVID-19 continues to reshape life as we know it, brokers can play a crucial role in helping small business customers navigate the challenges and the opportunities that may come their way. Let’s face it, giving your customers the means to adapt to change –and quickly – can be critical to their ongoing survival and long-term success.

Taking the time to talk

But it can’t happen without effective communication. More than ever, brokers need to take the time to understand a customer’s current reality – to find out how their business is positioned in today’s market; the extent to which COVID is affecting their fortunes; and what they are doing, or hoping to do, to meet these challenges, or opportunities, head-on.

It is only through these in-depth conversations that you can hope to respond to your customers’ evolving circumstances, at a time when they need you most.

Rising to the challenge

Of course, a face-to-face conversation is something of a luxury these days. Yet that doesn’t mean you have to forego the closeness this brings; many brokers are finding innovative ways to overcome this challenge. And ultimately – however you choose to connect with your customers – it’s about having the conversations that really matter to them, so you can help provide the solutions that will potentially turn around their lives.

Nailing the basics

Your priority is getting to know all about a customer’s business – their products or services, their customers, how they’re positioned in the market. The following questions will give you a better idea:

• What business are you in?
• What industry sector do you work in?
• How do you operate? (i.e. retail/wholesale/service/online)
• Who are your most important customers now?
• Who will your most important customers be in 12 months? Five years? Ten years?
• Why do your customers buy your products/services?
• How are you positioned in the market?
• Why do you think you are successful?
• In what areas would you like to be more successful?
• Is your business model sustainable in the long-term?
• Are there parts of the business you should consider pivoting or exiting?
• Are you vulnerable to market disruptors?
• Is there any area where you can be a disruptor?
• Who are the key people in your business?
• What plans are in place to cover any planned or unplanned absences?
• Have you considered key-person insurance?

Show me the money

Next, you need to be confident you understand exactly how your customer’s business is bringing in money – and to what extent that’s been undermined by COVID-19.

For instance, you could ask:

• How do you forecast your business cashflow?
• How do you know that level of revenue is achievable?
• Do you have a ’stretch’ aspiration when it comes to your revenue?
• How often do you review your pricing model?
• Do you model how profitable your different customer sets or business lines are?
• How and when do your customers normally pay?
• How strict are your payment terms and conditions? Do they need to be reviewed?
• Has COVID-19 impacted how and when customers pay?
• When do you think normal trade conditions will return?
• Are your debtor collections well managed?
• Have you sought any financial assistance, including government assistance, due to COVID-19?

Paying the bills

But, of course, none of this matters if your customer’s expenses are spiralling out of control. Understanding their fixed and variable costs – and how flexible these might be – will give you a better idea of just how precarious their cash flow is.

Here are some questions that might provide important insights:

• Who are your key suppliers?
• How and when do you pay them?
• How often do you review your supplier terms and conditions?
• How is your business affected by:
  • An increase in suppliers’ costs?
  • Discrepancies in customer demand versus availability of stock?
  • Delays in receiving stock?
• What are the payment cycles of the business?
• Are there any outstanding payments?
• Are your creditor payments under control?

The bigger picture

It’s also important to understand how things may stand over the longer term. Fixing your customer’s cash flow woes can only go so far if they face other external threats.

So try these questions:

• How is the business positioned against the competition?
• How often do you review the competitive landscape?
• Do you have a clear differentiator in your market or industry?
• What factors adversely affect consumer demand?
• How is the business doing?
• How has COVID-19 affected the business?
• Have you had to pivot the business in order to survive? -How liquid is the business?
• Do you have a significant cash reserve to cover staff entitlements?
• If adversely affected by COVID-19:
  • Do you have access to further capital to cover your position until normal trading resumes?
  • What are your defined stages of recovery?
  • Will this be gradual or immediate?

A glimpse of the future

It’s hard to help someone if you don’t know anything about their vision – where they hope to take the business from here. Getting to understand this will take several important questions:

• What is your 12-month, five-year, ten-year business plan?
• What are your key business and personal goals? How do they intersect?
• How often do you review your business strategy and your goals?
• Has your business plan changed and if so, why?
• Are the changes sustainable/ quantifiable?
• What are your plans regarding expansion/consolidation/ winding down or selling?
• Are you relying on the sale of your business to fund your family into the future?
• Have you projected your cashflow needs?
• How are you financing your plans?
• To what extent are you relying on cashflow, short or long-term finance, or equipment finance?

Knowing the person behind the business

Just as important, however, is understanding the person behind the business. That means you need to put this conversation within the context of who your customer is. If you don’t know already, find out what motivates them, who or what is important or special to them, and what keeps them up at night.

It is only then that you can hope to gain the understanding and trust you need to help your customer on the next critical steps of their business journey.

For more information on what you need to be talking to your small business customers about right now and how we can help, speak to your Suncorp Small Business and Commercial BDM.