Resilience and Optimism - the Essential Ingredients of Recovery

Two of the things that have impressed me about our clients recently are their resilience and optimism – two essential ingredients of recovery from a crisis.

Both clients I am about to talk about have of course given me permission to share their stories.

A particularly good example of clients who display these strengths are Rick and Lisa Morrison.

Rick and Lisa Morrison founded and operate pet accommodation from two magnificent premises – Cottage Kennels and Cattery in Plenty and Rothwell Run in Little River. These two premises are the epitome of safe and caring pet accommodation.

Given the Government restrictions on our domestic and international travel, we have little need for others to accommodate our pets, so you can imagine how many guests Rick and Lisa have had since Victoria has been locked down.

Having developed the Cottage Kennels and Cattery business over more than thirty years, and having developed the beautiful Rothwell Run pet resort over the last few years, Rick and Lisa would be forgiven if they had been rendered despondent by such a sudden turn of events not of their making. Instead, Rick and Lisa have taken this opportunity to lay the groundwork for recovery – it is difficult but they are doing it.

Rick and Lisa’s first priority was the welfare of their staff. Their next priority was to take advantage of the vacancy at both premises to make some improvements that a large number of cats and dogs normally make difficult.

It is not great to have no guests but Rick and Lisa mustered-up the strength to view their predicament in positive terms – they decided that the evaporation of activity at both of their premises had given them the opportunity to think about the next era of their businesses in a way that they had not had time to do while they were focusing on the development of Rothwell Run over the last few years.

I did not just refer to Rothwell Run as beautiful out of deference to our clients. The site is beautiful, so it lends itself to more than accommodating people’s pets comfortably. It is the ideal place to capitalise on local tourism – both because of its location at the foot of the You Yangs mountains and because of the aesthetics that Rick and Lisa created at Rothwell Run.

There is a lot of traffic that passes Rothwell Run’s gates, so Rick and Lisa are planning to add a café at the front of Rothwell Run to capture that passing trade. With a steady volume of traffic and no competition close-by, it is a ‘no brainer’. The plan is not just to refresh passers-by. The plan is to engage tourists with Rothwell Run.

Rothwell Run is all about caring for animals, so its logical target market is people who care about, or are interested in, animals. Rick and Lisa have a lot of land at Little River, so they have room for some of their own animals. With the time that they have had to plan for recovery, Rick and Lisa have been planning an Agricultural Tourism attraction at Rothwell Run. An attraction that will allow visitors to interact with farm animals.

What is so wonderful about this idea is that it attracts people who are interested in animals and are therefore more likely to be pet owners. Think about the geographic diversification of Rick and Lisa’s businesses also. One is in the North East of Melbourne (Cottage Kennels and Cattery) and the other is South West of Melbourne (Rothwell Run). When Rick and Lisa promote one business, they also promote the other. Day-trippers visiting Rothwell Run may be logical customers of Cottage Kennels and Cattery because of where they live.

It is all about expanding the number of ways in which Rick and Lisa engage consumers who have not yet engaged with their brands, and broadening the catchment area from which their customers originate.

Engaging new people with the business is not just about tourism and hospitality, however. It is about introducing new people to Rothwell Run’s and Cottage Kennels and Cattery’s existing accommodation and pet care services. Rick and Lisa are also planning to offer additional services to pet owners.

There will be services available to visiting pets not just to pets being boarded. Offering pet grooming and occupational activities to visiting pets creates an additional income stream and again engages new pet owners with the Cottage Kennels and Cattery and Rothwell Run brands.

Rick and Lisa Morrison have looked at two key things in planning for the recovery:

• opportunities that already existed but that they had not previously had time to exploit (i.e. the traffic passing Rothwell Run)
• creating new revenue streams that also draw customers to their traditional offerings (i.e. tourists who are likely to be pet owners)

Also, it is interesting to note that an absence of guests has highlighted that people cannot fully appreciate Cottage Kennels and Cattery and Rothwell Run unless they see the high standard of the accommodation and services. Drawing people in via tourism and hospitality also showcases the impressive facilities.

Another of my clients that exemplifies resilience and optimism is Rounded. Rounded is an application designed to make Accounting easy for freelancers and sole traders.

Before Victoria went into lockdown, Rounded was due to host an event for 50 attendees. In the first week restrictions were imposed, Rounded nimbly converted that 50-person physical event into a 512-person virtual event. Despite all the chaos in the World that ensued, the last three months have been Rounded’s best months ever.

So, how is this a story about planning for recovery? Well, in many ways, Rounded is facilitating the recovery for its users.

One of the things that struck me most is the perspective that one of Rounded’s Directors, Nicholas Beames, had on the financial crisis that was unfolding before our eyes.

As the extent of the Economic situation was becoming abundantly clear, Nick shared his perspective with me. He saw the crisis as forming a hat-trick of crises he had experienced professionally – the Global Financial Crisis (GFC), 9/11 and the current crisis.

Nick learned a lot from the first two Global Economic crises. One of the biggest things he learned is to plan for the crisis, and plan immediately.

As the world of work changed overnight, Rounded slashed its variable costs by 25%. With that out of the way, Rounded was able to focus on the impact of the escalating crisis on its users. As Rounded watched the number of invoices its users were generating decline in line with the decline in Economic activity, a curious thing emerged – the number of freelancers and sole traders using Rounded grew.

The fundamental change in the way we work that this crisis has forced has led users to the Rounded application.

Some people have lost their jobs and have no other option but to go out on their own now. Some people are doing more freelancing because their other work simply does not exist at the moment. Freelancers and sole traders are being drawn to Rounded because they are planning for their recovery.

How did Rounded plan for the Recovery phase? It became a crucial element of its users’ recovery.

As Nicholas Beames puts it – Rounded has become an essential item in its users’ recovery toolbox.

Freelancers and sole traders are not interested in accounting and bookkeeping. They are focused on delivering their service and invoicing for it. By making that process easy for its users, Rounded has become vital to its users.

Whilst Rick and Lisa Morrison’s patrons temporarily disappeared and Rounded’s users increased, there is one big thing that both groups have in common –

they took the opportunity to use the crisis to focus like a laser beam on the future and not dwell on the things they could not control.

The biggest realisation that Rounded is taking into Recovery is that it is more of a ‘need’ for its users than it thought. Until the crisis, it thought its users considered it as more of a ‘want’. Instead of being one of the variables they cut, Rounded is one of the essentials their users retained.

There are really so many lessons in Rounded’s story:

• learn from past experiences (e.g. observing the lessons of the GFC and 9/11);
• adapt quickly (e.g. the early conversion to virtual versus physical engagement with potential customers);
• plan early (e.g. adjusting its budget was one of the first steps Rounded took);
• dump your excess baggage / go into Recovery lean (e.g. slashing 25% of variable costs);
• growth happens when you leverage your strengths (e.g. instead of just ‘saving the furniture’, Rounded made itself indispensable in a time of crisis);
• make your customers’ life easier and it is easy to find customers (e.g. Rounded makes it easy for freelancers and sole traders to perform the task that is most important to them – sending their customers an invoice);
• put structure in place so that you can focus on what makes you profitable (e.g. when invoicing is easy for freelancers and sole traders, they can focus on service delivery);

Without resilience, you will not survive the crushing blows. Without optimism, you will not see the opportunities that lie ahead. Without planning, you will not be able to get to your destination.

Edward Huntingford is a Chartered Accountant who specialises in advising private business owners. You can read more about Edward here. Edward is one of the leaders of the integrated accounting and financial services firm, Fordham. Fordham is a specialist part of Perpetual. Perpetual is an ASX-listed, diversified financial services company which has been serving Australians since 1886.