Surviving the Festive Financial Crunch

Jason · 00:00Welcome to episode 215 of The Numbers Game. I'm Jason. I'm here with Nick and Marty. How are we, fellas?

Marty · 00:06Ah, the Christmas trees are up, Jason. It's, uh, it's getting exciting time of the year. What am I getting for Christmas? Well, that's what I'm hearing from my kid anyway. But, uh, yeah, good time of year. Been a lot of hustle until that time.

Marty · 00:21So, yeah, going good. Nick, how are you?

Nick · 00:23Mate, going good, going good. It's funny you say that. We've um, we've never really been Christmas tree people, but now that we have a Have a daughter even though she's got no idea what Christmas is. Um, It's it's it's a thing. It's a thing. So we've got to sort that out in the next couple of days

Marty · 00:39So real tree or just No, no, no, no, no.

Jason · 00:43Not not with a cat. God.

Nick · 00:45No, no, no, no, no, no. Look, I get the romance, but, uh, no. Happy with a fake one. I think you can even get ones now that have got the lights built in. Um, oh, that's good. Clever. Yeah. Clever.

Marty · 00:57Where do you get them from? Do you know where you get them from? I'll let you know, mate.

Nick · 01:00I've got no idea.

Nick · 01:00I've just been told about them, but, um, I will let you know.

Jason · 01:03If, if you are in the Southeast suburbs, shout out to Hardware Hub. Um, they have a huge Christmas range. I had to go through, I was going through their inventory items with them in a recent meeting. Uh, so yeah, that's, uh, out in Pakenham. Big, huge warehouse, heaps of Christmas stuff.

Jason · 01:18They always have mega deals on Christmas stuff at this time of year. Do

Nick · 01:22we have a numbers game

Jason · 01:22code or? Yeah, we can get one. Yeah, I'll tell them TNG at checkout. Yeah. Punch that into check out on the, uh, on the online store, we'll, we'll get that going. Uh, so by the time you listen to this, go over to hardware hub.

Jason · 01:33com. au and we'll get you the numbers game special, um, Christmas tree, Marty, look, if Casey is listening and you know, I'll, I'll probably cop a bit of that bit for this, but she is the Christmas Grinch. Um, I've, I've been at, I've been advocating for a Christmas tree for seven plus years. And I think. We, in the early days, we lived with one of her, um, lawyer mates, Cassie and Cassie and I ganged up and went, no, we're having

Jason · 02:00a Christmas tree.

Jason · 02:00And it was the only year I got a Christmas tree because it was two on one. Um, since then, you know, grown up, got married, have our, you know, have a place of our own and a cat. Um, and Casey's excuses. No, the cat will destroy, the cat is like a little terror and it will destroy the Christmas tree. Whereas I'm just like, let the cat have fun, but let me have a Christmas tree.

Jason · 02:18Like, you know,

Marty · 02:19Well, my dad is absolutely devastated because he's obviously Catholic and Charlie's, I don't know what he's going to be, but he's certainly not into religion. And, uh, but he still wants the tree and the presents. So we've got, We've got some big philosophical issues we've got to deal through.

Marty · 02:33So

Nick · 02:34very funny. There's something nice about it. There's something nice. There is something nice about it. In

Jason · 02:38saying that though, I'll just quickly touch on, I felt like this year was the first time I really noticed like a lot of people going for Christmas trees on November the 1st. So it's actually Christmas trees and the decorations and the shops.

Jason · 02:50I reckon November 1, things just escalated so much. And I don't know if I've just never noticed it before. No, it definitely went

Marty · 02:57early. Yeah, I thought

Jason · 02:58so. I don't know if

Jason · 03:00they're trying to beat the, the cyber, you know, the black Friday cyber Monday because all those online sales move forward so much to the start of November.

Jason · 03:07Now maybe they're just trying to, to build the momentum around Christmas so that people start to think about their Christmas shopping while all the black Friday deals were on. I don't know.

Nick · 03:17Maybe it's just a, uh, you know, retail's in a bit of strife. So let's try and bring those Christmas numbers forward.

Jason · 03:23Yep. Bang on next speaking a bit of strife, Marty, what have you got for us today? How do we stay out of strife? He's always

Nick · 03:28in strife, Marty Bids.

Marty · 03:31Uh, look, I wanted to talk about just, uh, small business owners again. And, uh, It has been a challenging economic climate. And I think it's across the board. And I always, I take myself back to 2012, where, um, you know, I was making a pivot in the business and growing my business.

Marty · 03:51And it got to the point of around October, November, where I'd made some big investments in people. growth. And

Marty · 04:00then all of a sudden I'm going, cash flows are really tight. I hadn't seen the upswing of the revenues off that investment. And I'd never been in a situation where I'm going, holy crap, I might not be here in January.

Marty · 04:13And, um, and I just wonder given that these challenging climates are sort of possibly worse than the JFC at the time as to what business owners are going through. And what I wanted to share with the audience is. that it's okay and there is a way through. And one of the things that happened to me in 2012, I was very fortunate, um, to secure an overdraft.

Marty · 04:37Now, interestingly enough, I got more than I needed on the limit on that overdraft, uh, during that Christmas period. And I only chipped into it, like I had about 250 grand limit, but I only ended up chipping into it about 60 grand. And it just provided so much sanctuary and peace of mind in my head because I knew everyone was going to get

Marty · 05:00paid and I knew we were going to trade out of it.

Marty · 05:02But I remember at the time that the stress that it caused, and I just remember coming home to Cole one night going, far out, I might have to actually close this down in, in Jan. Just to that, to that level. Now, fortunately we had commissions rolled through in January. It wasn't as big a problem as I thought.

Marty · 05:24However, it was significant call to action. And then I see an article this week that, uh, was, I think it was YouGov, uh, did the research as well as Prosper, uh, that was saying that. Nearly 18 percent of small business owners are not operating with any cash reserves at all. And 77 percent of leaders are reporting subsequent personal impacts due to rising costs, including their personal finance.

Marty · 05:52So, and 43 percent of people in those positions are experiencing emotional stress. So when I

Marty · 06:00read that, I just thought I was in that position and I remember how terrible it felt. And. But it's amazing what you can do if you get the right people around you to find a way through to the other side and then you trade out of it.

Marty · 06:14Um, yeah, I'll just throw that up as an experience. But have you ever experienced that in your own businesses and lives or known of clients that have, uh, been through it?

Nick · 06:25Yep, yep, yep is the answer, um, I'm just trying to, I'm just trying to rattle off all the times, um, no, no, I think, um, no, mate, definitely, and I think it's all relative too, right, like, I think the one thing that I've realized is it doesn't matter what size your business is, um, there's, if you want to To your point, you said you wanted to pivot and grow, there's all, there's going to be those moments.

Nick · 06:53Um, and you know, yours I think was for a good reason, it was growth. Uh, but I think what's

Nick · 07:00happening now is, you know, it's possibly, uh, economic conditions that are impacting people, but it is, it is amazing, um, the peace of mind that can be created, you know, with something such as a, such as an overdraft and it actually goes further than giving you.

Nick · 07:19A cash surplus or a cash, um, uh, or some capital behind you. But you know, you talk about stress, um, the ability to, to focus on actually what you're trying to achieve. If you're losing sight of what you're trying to achieve because you're focused on the bank account all the time, then It actually takes you away from doing what you need to be doing, which is, you know, bringing in revenue and, you know, sticking to a plan or your, your growth plan.

Nick · 07:45Um, if you do have the growth plan, you run out of money. Sometimes you've got to deviate from that plan, which means you don't get the ultimate outcome that you were trying to achieve. So, you know, and I think back to some of the stuff that you've done with some of our business clients, um, the

Nick · 08:00funding piece is not.

Nick · 08:01It shouldn't be reactive. It should be proactive. So, okay. What are you trying to do? Are you trying to grow your business? Okay. That's great. Have you thought about the costs associated? Have you done some cash flows for the next 12 months? You know, because you don't, in most cases, particularly in our business and Jason's business was the same.

Nick · 08:19You don't get immediate ROI. It takes time to get that ROI. So how do you get through that difficult period? Yeah. Do you have a business that needs, you You know, you need to do seasonable, uh, seasonal adjustments on, even we've done that in our business and we've gotten way better at that. And Geordie has been awesome.

Nick · 08:34Just understanding, okay, based on our historic numbers, where are our peaks and troughs? So where are we going to run into, uh, lower cash, um, Lower cash than other times in the year and being ultimately prepared for that and then, you know, understanding what we need to do each month to compensate for maybe January and February being down.

Nick · 08:56So it all comes back to really good planning with your accountant, number

Nick · 09:00one, and number two, you know, if you've got a broker, um, or a business advisor such as yourself, Marty, that can you know, really set up a strategy around the funding instead of reactively like most people do.

Marty · 09:13And like you say, sometimes that's just not what happens though, because people do get busy.

Marty · 09:18So even if you are needing to be reactive, like in this situation, it's sage advice, what Nick was talking about, but I go, that's okay too, because I just go in the retail space. particularly this year as consumer sentiment drops a bit and spending is not guaranteed compared to previous years, you're going, here they are, these business owners having to buy stock in advance with uncertainty as to the outflow of that stock.

Marty · 09:47So it might be a short term positioning where you go, or I have to secure what the next two or three months look like. And then you obviously trade out of it on the back end. And then you might

Marty · 10:00formalize more distinct plan for the following year as well. But I just remember being in that situation at the, and I remember having that moment going, fuck, I just don't know.

Marty · 10:13I feel like I know I'm going to get out of it, but what do I do in this next two, three months? And just going, just not having the answers at that point in time, it was pretty scary until I went and got the answers. And just to let people know. That those, those solutions are available.

Nick · 10:29So Marty, question for you then.

Nick · 10:31So you said you went, you went and got the answers. So if this is. You know, if someone's thinking about this stuff, what, what do they do? Like, how did you get the answers?

Marty · 10:40Well, firstly, talk to me, but, but secondly, as well, I was very fortunate that I, the very person that I'd hired in the business role actually had the solution for the business because I went to that person directly and said, You know, this is

Marty · 11:00what I'm concerned about.

Marty · 11:00And there was a bit of embarrassment around that too, because I'd, yeah, I'd hired the bloke and now I'm asking him for help, but it was, it was really good. He goes, actually there's, you know, the business is doing really well overall. And there's a short term solution here that we'll be able to get you through.

Marty · 11:16So I had the right person. But even if you were like, if you had an existing business banking contact, obviously, you know, you can talk to them and just say, look, cause sometimes you can do a temporary overdraft. So it might not even be a full blown overdraft, but sometimes if you've got a good history with a lender, they might say, all right, here's a temporary limit for three months.

Marty · 11:37And that's it. And then, you know, it falls away, but that still creates a stress on the back end of it because it has to be cleared. Um, secondary, I would say definitely, you know, look to establish something long term because even if it is 20 percent and it's unsecured and there's no guarantees around it, um, that's tying in the director's properties and stuff, it's

Marty · 12:00interesting how, you know, Once people trade through these situations, how they find an upside in the business of use for that money anyway, which is really fascinating.

Marty · 12:10And, and that's what I've found. People have utilized these things effectively in managing their business going forward as a backup, um, for opportunity as well as, you know, a discomfort. So it's been, yeah, it's been interesting on that, but definitely talk to, if they have a banker, uh, They can talk to their business banker, but the preference is come to, come to innovate, of course, because at least we can, you know, provide choice around that opportunity and give direction as what's, what do you need now, but also what's good for the future and work with you long term on that.

Marty · 12:44Um, that's, that's the key. That's the key message there, Nick.

Jason · 12:47I, uh, actually can't remember a time when I've had so many conversations with people feeling the pinch at the moment. Um, you know, I think when COVID hit and everything else that was going on and, you know,

Jason · 13:00obviously a long time, it's been a long time since the global financial crisis, but basically, you know, business analysts are looking at the current stage of business cycle saying that this is the harshest business conditions and business environment since the GFC.

Jason · 13:15Um, And then, you know, see the data and see the stats zero to a small business insights website where you can see all the data of wage growth, sales growth, cash balances, you know, debtor days, you know, how long is it taking to get paid. But it's more when you actually have real life conversations with, with humans on the other side of the meetings that we're having.

Jason · 13:34Um, actually everything in that article, Marty, that you went through around, you know, business owners aren't paying themselves, you know, at the moment going on. No,

Marty · 13:4146%. Of business owners have reduced their income to back their business. It's an incredible stat.

Jason · 13:48And then, yeah, I think it was nearly a quarter of business owners are actually putting some of their own personal funds back into the business to keep it afloat at the moment.

Jason · 13:56So when you start to look at that and go, you know, the failure rates of business, the

Jason · 14:00number one reason a business fails is due to managing cash flow. So if you've got one in five businesses that are going to shut down over the coming couple of years, the stats are worse than that. Cashflow is the number one reason that a business fails.

Jason · 14:14And the other one that we're getting right now is the ATO payments. We're coming up to, you know, the, the September bass was lodged recently. It was due end of November, a couple of weeks ago. Um, all of a sudden there's this big ATO balance that's built up. And people are making the decision to go, Oh, do I pay the ATO and have no money left over for December, January, or do I need to sit on it and kind of work out a payment plan?

Jason · 14:39So I think, you know, statistically speaking to a whole bunch of other accounting firm owners as well, the amount of payment plans that are happening at the moment, because people are just going, Who can I rob, you know, rob Peter to pay Paul or just spread out some stuff and go, just kind of sit tight because of the uncertainty that's happening over December, January.

Jason · 14:56And I mean, even from, from a personal point of view, same,

Jason · 15:00you know, same as what Nick said, yes, on all fronts, you know, from a cashflow point of view. Sometimes what's the saying, the mechanics car is the worst car on the road. You're so busy worried about everyone else's cashflow that sometimes you then at the last minute go, shit, let's have a look at ours.

Jason · 15:11And fortunately we run pretty good forecasts and pretty good projections. So we can pretty quickly figure out if we're going to have a bit of a cashflow crunch, which is usually a timing thing with December and January. Cause in professional services, you pay out a truckload of annual leave for everyone to have a couple of weeks off over Christmas, New Year's.

Jason · 15:28It takes a little bit of time for the wheels to start turning again in January. So it's all these things though, that like now hearing it, it's just, you know, we obviously share that on this, this show just to go, if you, if this is resonating with you that, you know, cashflow is looking tight, ATO debt's building up, um, you know, you're thinking about how to, how do you maybe tipping some of your own personal money back in?

Jason · 15:49This is the time to talk to Marty. And, you know, we've had great success with our clients that have worked with you, Marty, um, in this space. And, and I know that they're better for it. They're, they're a bit more stress free, you know, the weights off the

Jason · 16:00shoulders, knowing there's a buffer or like, you know, that, you know, something to fall back on when you know, Hey, look, I've got money coming in, in a few weeks, but I feel safe and secure that payroll's going out or super's going out because of that buffer that's there.

Marty · 16:13Yeah. And like I said, 43% Um, business owners are experiencing high stress levels at the moment. That's a, that's a very high number and there's other alternatives. Even when you have tax debt, there are still ways through, right? In regards to might be short term business loans. Um, it might be overdrafts, but there's lots of different opportunities, but look, the three impact points that can make a difference before Christmas.

Marty · 16:37We want you to have your Christmas turkey still. Um, so. Again, explore business overdrafts or short term debt, you're gonna trade out of it, but it's a short term solution to get you through over the holiday period. Um, more organic stuff that you can do, which is interesting is, um, think about, Controlling expense.

Marty · 16:57You might be able to control some legitimate

Marty · 17:00expense that sort of, uh, overrun on your business that you could bring back in and create some cashflow through that. And again, even with marketing, um, people spend so much on marketing and trying to grow. Think about organic growth. Think about ways we can get word of mouth out there and actually do organic stuff that doesn't cost anything in order to get some value out of it.

Marty · 17:22Back instead of just having that patron, that can sometimes happen. So there's some levers you can quickly pull and that's what I've always found. Organic type of marketing, if it works well, could work really, really well and at, and it's cost efficient, but also in regards to um, just, just minimizing cost in the short term as well.

Marty · 17:41So hope that's helpful to the listeners out there.

Nick · 17:44I think, yeah, I think that's super helpful, Marty in it. But I think the other thing too, as much as Jason has said, come see you, I think. Um, at the same time, you need to be sitting with your accountant because quite often, um, I think one of the things that you would see doing what you do, Marty, is repeat

Nick · 18:00offenders.

Nick · 18:00So people that come for short term funds, um, or overdrafts generally keep coming back because they don't have a plan, um, to exit those funds or they don't have a, you know, an underlying strategy. So you don't just go borrow money, um, because you need to get through, uh, through a period. It's Okay, well, if we're doing this, is there, is there a way out of this or, you know, is there something else we need to be thinking about?

Nick · 18:26Why is this business not viable? Why am I, am I in this position just a few, um, just through circumstance and I'll definitely trade out of it or is there a chance I won't trade out of it? So, I think both of you guys can add. You know, it's an immense amount of value for sure. Yeah,

Jason · 18:42not going at a loan is probably the absolute most pivotal, smartest piece of advice there.

Jason · 18:48Um, you know, your accountant, your financial advisor, your broker, all of those areas, uh, are super crucial. And, you know, in, in a real life story, you know, we've seen, um, business owner

Jason · 19:00that has not, not buried their head in the sand, but, you know, They, they just kind of try to sort it out themselves. They, they went direct to a funder and got some really high interest funding.

Jason · 19:12There was meant to be short term, you know, it was going to pay, pay a bill that kind of got the next job finished and you know, so on and so forth, but whatever happening, Because there wasn't the advice sought, there was no thought to the next bit of cash flow, how high the interest rate was, how big their repayments were, that short term funding ended up crippling this business and it went into liquidation and now the business has gone shut down, you know, failed.

Jason · 19:37Um, so that's the other, the other side to, you know, yeah, sure, you can get some short term funding, Make sure you've got your advisors on board. You've talked with, you've spoken to your accountant, the broker's always going to make sure they're dotting eyes and crossing T's to show affordability and to show that this is a good, clear plan.

Jason · 19:53Um, but if you go it alone, there's some sharks out there that may give you the money knowing full well that. You know, they've got some security over your

Jason · 20:00home, um, or some personal assets and you don't pay it back. They're coming after your house. And, you know, the last thing we want to see here at the numbers game is our, our great listeners and, and business owners out there that have done the hard yards lose the property that they've worked their asses off for.

Marty · 20:14Yeah, and Jase, a better plan ultimately provides better financial opportunities and finance opportunities as well for the business to grow sustainably in the future. And again, so today I just wanted to bring that up because I just feel like there's there's people stressful in the short term that we can resolve and provide a solution for.

Marty · 20:35And then coming out the back end of that, we have a longer term opportunity to really support business owners and, uh, You know, talk to Jace, talk to your accountant, talk to your broker, your banker, whatever the case may be. It's, um, everyone's here for you. So utilize it.

Jason · 20:52Beautiful mate. Well, well wrapped up Marty and a great episode for you to bring to our audience and such a timely thing for them to hear.

Jason · 20:59If you do want to reach

Jason · 21:00out, obviously the team at Future Advisory is always happy to help, and then again, you know, the experts. Experts to innovate, whether it's financial planning, mortgage broking, business funding, assets, the whole deal. Uh, go and check out Innovate I-N-O-V-A-Y [t.com](http://t.com) au. You can find Marty's details there.

Jason · 21:15His personal mobile number is on the site. So if you wanna call Marty, who happens to be the number one rated host of the show, he will be available. He'll answer your call. He's a great man. And so next time

Marty · 21:28cashflow is king, cashflow is oxygen. 0 4 3 9 double 0 2 1. Double nine. There it is. It's out of the universe.

Marty · 21:36Game over.

Jason · 21:39This podcast is for educational and informational purposes only. The conversations are of a general nature and do not qualify as financial or tax advice. We recommend before you make any financial decisions, you consult a licensed professional. Individuals on the podcast may hold positions in the companies discussed. ---