Are You Too Supplier Dependent?

05/02/21 • 20 min

In this episode of Get to the Contest Small Business Podcast, I want to talk to you about something that’s often overlooked by small business owners—It’s all about supplier relationship and your business reliance on them. I'm not just talking about suppliers of products, but also suppliers of services, referrals, and more.
Listen in as I talk you through a few scenarios of supplier reliance and let’s take a look on how these circumstances may affect your businesses.

In this episode we answer the following questions and some tips to overcome them:

What happens if your supply goes broke?
What happens if your supplier is taken over?
Do you have a relationship with a supplier business, or do you just have a relationship with an individual at that supplier?
What if your supplier just retires?
There are unforeseen sudden changes in supplier circumstance. What happens next?
What if your suppliers are exposed to change in the political climate?
If your main financier stops financing you, perhaps due to a change of policy and you can no longer have your facility, are you instantly cooked as a business?
There’s a sudden supply interruption outside of your control—what do you do when you can’t get the products that you’ve ordered?
What are the risks in relying too much on a specific marketing medium or something as public and free like as social media platforms such as Facebook, Instagram or Twitter?

Here are some key takeaways from this episode:

Conduct a risk review. Go through and look at your business at the various mentioned risk factors and see what applies to your business and make no assumptions that the status quo will be in place.

Look at the likelihood of each risk. I know some of these things might seem unlikely, but also look at the size of the damage to your business should something happen. Now, that will then lead you to a course of action where you either take steps to reduce the likelihood of the event happening, or you take steps to reduce the damage that would occur if the event did happen.

Do this assessment on an annual basis because as your business grows and evolves, so will its risk. And so will your supplier's risk change and evolve as well. So, do this on a regular basis, just to make sure that your assumptions around your business continuing, your business just doesn't fall apart due to something that's beyond your control that happens to a supplier.

In this episode we answer the following questions and some tips to overcome them:

What happens if your supply goes broke?
What happens if your supplier is taken over?
Do you have a relationship with a supplier business, or do you just have a relationship with an individual at that supplier?
What if your supplier just retires?
There are unforeseen sudden changes in supplier circumstance. What happens next?
What if your suppliers are exposed to change in the political climate?
If your main financier stops financing you, perhaps due to a change of policy and you can no longer have your facility, are you instantly cooked as a business?
There’s a sudden supply interruption outside of your control—what do you do when you can’t get the products that you’ve ordered?
What are the risks in relying too much on a specific marketing medium or something as public and free like as social media platforms such as Facebook, Instagram or Twitter?

Here are some key takeaways from this episode:

Previous Episode

Small Business Post-JobKeeper - Apocalypse or Opportunity?

Check it out on Itunes | Stitcher | Spotify
Listen in as I talk about the end of JobKeeper payments and what small business owners need to be aware of as they navigate the next 12 months—all these and more in this episode of Get to the Contest Small Business Podcast.
Here are some key takeaways from this episode.
Covid 19 brought many challenges and changes. The Federal Government offered a number of initiatives to help small businesses. These included:

The cash boost
JobKeeper wages reimbursement
Changes to rules around insolvent trading – protecting directors somewhat.
Virtually turned off all Debt recovery & penalties – More than 5000 staff reassigned from Debt to JobKeeper.
Other assistance around delaying the payment of commercial debt.
Changes to asset depreciation laws allowing instant right off.

Check out this PDF File: http://bit.ly/JobKeeperPDF
Impact of the Government Initiatives on Small Businesses

Confidence
Zombie Business kept alive until March 31.
Major Decrease in small business liquidations
Unemployment peaked July 2020 at 7.6% but dropped and was 5.8% as at Feb 2021.
Demand has spiked for plant & equipment.

Once JobKeeper ends, what’s next?

ATO to turn on the recover switch of the 53 Billion Dollar book of debt
Insolvency’s will go up – Keep an eye out for the notices .Don’t ignore
Many voluntary liquidations will take place, now that the free cash has stopped.
Commercial debt and other supplier payments will now need to be repaid.
Above hasn’t impacted consumer confidence.

What should you do?

Don’t ignore ATO correspondence. Director Penalty notices can be very time dependent.
Get numbers up to date
Get lodgements done – even if you can’t pay
Ask for ATO repayment plans now – get on the front foot; you should be able to get over 24 months.
Supplier terms – lock in NOW
Have a budget & cash flow
Go hard on debt collections NOW. Before people are too far removed from the free money
Have funding approved – Even if you don’t need it. Banks are ridiculously busy. As are alternate funding providers assisting SME’s with products like trade finance.
New clients – Do a credit check. Make sure they haven’t been cut off. Put them on a limit.

Are there any opportunities through this pandemic?
Every Boom Bust has the impact of cleaning out industries. Those that were weak die off, leaving those that were left to thrive. Covid 19 will be like the GFC on Steroids.

There will be a lot of opportunity such as—there’s never a better time to sell 2nd hand equipment than now. Limits to supply from Overseas, Depreciation Policy changes and low interest rates are driving the demand. This is great – provided you aren’t also stuck sourcing a replacement asset.

With other businesses folding, this is also an opportunity for you to recruit a valuable team or workforce for your business.

Also, strategically purchasing struggling business for a nominal cost could add significant dollars to the bottom line. Clean up your own balance sheet if you can. Keeping your numbers up to date will make for an easy review of your finances and help you not miss out on business opportunities.

Feel free to email me at [email protected] for questions and further inquiries.

Next Episode

Money Moments with Mark Nagle

What are money moments? We talk to Mark Nagle, executive director at Treysta Wealth and Advisory, to answer this question and listen in as he talks to our host, Warwick Jackson, about people’s relationship with money—the good and the bad.

To guide you through this episode, here are some key takeaways from the conversation:
1. Surround yourself with the right people that add energy rather than take energy from you

Mark talked about inner passion and understanding what gives you energy, what saps your energy, designing your business accordingly and filling your week accordingly. If you love what you do and are surrounded by like-minded people, work doesn't become a chore-- it becomes far more sustainable.
2. Make a commitment to implement something

Business and career growth also means significant amount of training and conferences that cost money & timet. Once you get back to work, it is important to set aside time and make steps for implementation of what you’ve learned and what you can improve upon. Otherwise, you've just had a working holiday that's achieved nothing.
3. Money moments can be wonderful things, but can also be the sad things in life as well.

Mark talked about a variety of money moments, which is, basically, anytime money touches our lives. From holidays, home ownership, rent, parents with money, rental to buy, retirement, helping your kids, to marriage or divorce, all these things are money moments. Whether they're good or bad, they will potentially lead to anxiety. To help you manage “money moments”, just be aware of these things and have someone in your life, such as a Mark or someone that's a trusted advisor, where you can sit down and talk through the situation, make a plan and have an informed decision.
4. Take action sooner.

Often, many people will face some anxiety or stress in making a big decision for your career or in life that sometimes, the uncertainty is just too much to overcome. Because of this, some may push back in making decisions which will then result to months or even years of nothing. If you are too scared to take the next step, find a professional or a trusted advisor that can guide you to an informed decision. Come up with a plan and take action – invariably, the downside is never as bad as you think.
5. Technology designed with the client in mind.

Tech is an important part of business, but making sure that it is designed with the client experience in mind makes it more personalized and improves business relations. Use technology to you and your clients’ advantage.

Have any questions for us? Reach Warwick Jackson through [email protected] or follow our Facebook account: https://www.facebook.com/Gettothecontest and visit https://www.gettothecontest.com/ for more.

For more on Money Moments, reach out to Mark Nagle through their website www.treystawealth.com.au or follow their Facebook: https://www.facebook.com/treystawealth and Instagram @treysta.wealth