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Protecting Your Business in Times of CRISIS

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The 10 Minute MBA, is a no-fluff weekly podcast that teaches you practical business lessons you can use to grow your business immediately.

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Welcome to the ten minute MBA. I'm your host, Scott D clary. On the ten minute and BEA. I give you tools, tactic, strategies, insights and tips that you can use to start, scale, grow and en x Your Business. Let's get into it. Hey, what's up guys? Scott here. Hopefully you're having a great week so far. Today I'm going to talk about doing business during tough times. Doing business during covid was tougher than ever on everyone. I had a great conversation with somebody on the success story podcast and we were speaking about how he operated his business during covid and how he grew and navigated and double down on what worked and sort of shelved what didn't and all the ideas and insights that came from him. And so, to give you some context, I have a podcast, success story podcast, where I interview incredible business leaders. On the PODCAST I sat down with Vincenzo Goozo. He is a dragon on CBC's Dragon Den, Aka Canadian Shark Tank. He owns the largest private movie feeder chain in North America. He's built businesses and brands in cinema, real estate, medicine, hospitality. He's done a lot over his career, but we were speaking about how his movie theaters have fair during Covid and I thought it was an interesting topic because he operates in a brick and mortar space where entertainment was significantly impacted by COVID and obviously everybody had some sort of repercussion from Covid, but brick and mortar businesses in particular, in terms of businesses that thrived versus really heard, brick and morter businesses were up there in terms of businesses that really had a tough time and a lot of people were not so lucky. Right and Vincenzo Goozo, he not only made it through Covid, he thrived during covid. So we spoke about some of the things that he did to protect his business and times of crisis and then some things that hopefully you can learn for and take from him for your own business. So we had a conversation about this. I thought it was a great topic. I wanted to put a video together on it and then I'll add some more context from my perspective, my point of view, as to how to properly implement some of the things that he...

...taught over. So first I want to give you a little bit of a background on Vincenzo goozle up. You don't know him, so you can sort of understand the level that he operates at. So he was a dragon on the thirteen season of CBC's Dragons Den. Of course, if you know shark tank, you know dragons den, were investors are pitching to the dragons and in dragons shoes whether or not they want to invest in the people. But the point is the people that are the dragons are highly successful business leaders. In Two Thousand and twelve he was recipient of the Queen Elizabeth the Second Diamond Jubilee Metal. He was also knighted by the Order of Merit of the Italian republic and continues to be recognized for his achievements in business and entrepreneurship. Now, in my interview we spoke about a lot of things, but most notably and most importantly was how to thrive during some of the most tumultuous times in recent history. So no one could have prepared us for the devastation the covid cause. Let's be honest, businesses were shut down, we were we weren't allowed to go inside, go indoors. People had to figure out how to go virtual. The cinema and film industry, which is Vincenzo Goozo's core business. This was hit especially hard during covid nineteen. To put things in perspective, between two thousand and Nineteen and two thousand and twenty, the Revenue Hie to theatrical entertainment or movie theaters dropped by nine point two billion dollars. In the US, the entertainment industry is a whole salt, the lowest market revenue since two thousand and sixteen, dropping by about thirty billion dollar. Two Thousand and twenty, there were only three hundred and thirty eight new movies released in cinema, as opposed to the usual almost one thousand over an entire year. Needless to say, cinemas were the companies that should have and did suffer the most substantial blows based on the COVID pandemic and environment. But Cinema Gouzo, Vincenzo Goozo's brand and line of cinemas was not one of them. In fact, his cinema chain bounced right back into eighty percent operational capacity after the cinemas opened in Quebec last year. benchmarked against the operational capacity they had pre covid so what did he do differently? So the first lesson he taught over was to face reality then adapt. When the pandemic hit, he had just spent...

...twelve million dollars on launching a new cinema, one that was open for three days before it was shut down. To quote Gouzo, it was a cash flow draining experience, but at the end of the day, that is what I think unifies the people who are successful in a crisis period. They live on a shoestring budget because they know investing during the crisis is when times our cheapest to do it. Rather than dwelling on the closure of his new cinema and financial losses, he adapted. So he looked at the new market conditions and he found ways to work within them. It's after the pandemic that everything explodes, right. So, for example, this is good. So again we have a real estate that we're no longer going to be building a theater on. They purchased land, so they're going to build industrial space on it. We know that we have anywhere between twenty four to thirty six months to make that happen. In order to take advantage of the industrial spaces, popularity and opportunity. During the pandemic, he used the spare time to focus on other branches of his business endeavors such as medical and hospitality, which he knew would be in high demand when the crisis eventually ended. He used the time to enter, increase production and make preparations for the post pandemic world. So he weathered the storm and doubled down on the highest value opportunities, the highest Roy Opportunity. So not everybody has different types of categories of business to go into. But even within the context of your own business, if you have one particular part of your business that is not doing so well, do you diversify? You diversify into other areas of business. During covid I was working and I was heading up a SASS company, a software company, and we were actually selling software to broadcaster as well as stadiums. That was shut down very quick we diversified. We launched for different products during covid and we were testing out new new markets. We are testing out new strategies against for different products. That allowed us to continue to maintain operations while building out a product that we took the market after covid which was exceptionally successful. So again, different scenario, different industry, same story. You double down on what's working,...

...but you can't just dive headfirst into the thing that's obviously draining cash. But there's always areas for you to diversify. What can we learn from his experience? First and foremost, it's important to face reality. So when conditions change, you can't keep doing things the way you always have. You need to be willing to adapt, even if it means making tough decisions and sacrifices. But do those knowing that you're going to allocate those resources or that energy somewhere else. In fact, according to a recent World Bank working paper, the businesses that survived the pandemic share it some commonalities. Most of them shared innovation. Those that innovated survive. So the beginning of the pandemic saw an enormous outbreak of digitization across businesses. They scrambled to find ways to keep their operations afloat. Everybody was moving virtual, from online stores to video conferencing. Companies are finding new and innovative ways to connect with customers to keep businesses running. The music industry, for example. These are just great examples, by the way, of how different industries manage to navigate the pandemics, or diversifying resources from things that weren't working doubling down on things that work. So artists took the virtual conferences and concerts in order to make money to keep their fans engaged. Small businesses learn how to sell their products through social media and online. Vincenzo's approach was a little different. He didn't go a hundred percent online. He focused on expanding his business into new sectors that he foresaw being successful. Post pandemic, immediate explosion after recession. The lesson is still the same. It's always good to have a plan B and be willing to experiment and try new things in order to stay afloat. The second lesson that he taught over was to think critically before you pay aannic. So it's not easy to keep your cool during a pandemic, but it's important to think critically and rationally about your business. You may find that there's no reason to be panicking at all, which could save you a lot of stress and ultimately lead you to make better decision. For example, Vincenzo balanced reflections on the state of his business likely saved him from throwing in the towel and basically probably cannibalizing some of his cinema venture. So at the beginning of the pandemic, everyone thought this was nail on the coffin for movie theaters. People were going to get used to staying at home, people were going to get used to streaming. I think they've got to realize that not everybody lives in a, you know,...

...one thousand square foot Condo, or rather not everybody was in the fourteen thousand square foot home and a lot of people live in a Onezero square foot condo. In the truth of the matter is, if I work nine hundred and twenty five in an office, the last thing I want to do when you're done at the day is to close yourself up and to stay at home. So he also understood human behavior. So even though there's modernization in terms of how we consume content, understood that social habits and behaviors are ingrained into people and those don't always change to the point where an entire industry is destroyed. An entire industry changes, evolves and is different, but it's not completely destroyed. So Vincenzo maintained his informed optimism through the pandemic. As he predicted, his cinema's bounce right back to success after the lockdowns were lifted. So we didn't close anything. He obviously stopped operations. He refocuses at first. He refocuses money and his staff and his time and attention. But he didn't kill any projects. He could have killed them. He could have stopped paying ranny, could have given up his leases or at least bought out as leason's and sort of maybe felt a little bit safer if you didn't have those assets that were obviously burning cash. But ultimately he did have forsight to understand that, yes, digitization affects all industries, but there is still a human component, that's still drives certain behaviors. So now, this isn't to say that keeping your Chin up and being the optimist will always save your business. What you need to do is look at your specific situation and make an informed decision, without resorting to hsterics or giving up before the races even begun. The next point that he made was to put your time to good use. So his final insight was basically to focus on where you should turn your attention to in a time of crisis. So when his cinema was shut down just days after opening. Remember, he opened a cinema. It was open for three days, he began to think where should he turn his attention to now that the new cinema is out of action? As a result, he ended up developing...

...other business endeavors and sort of checking some goals that he wanted to check off that he hadn't previously had time to focus on. So all of a sudden the movie theater wasn't taking twenty four hours of his time and his team's time. So they took a chance on buying real estate that was retail base and entertainment based. The new direction you take as a business could relate to the business itself, or it could be that you take a new career direction all together. The important thing is not to dwell on what's happened and focus on what you can make happen. So he focused on three main points. He focused on facing reality, then adapting. He focused on thinking critically before you panic. Then he focused on putting your time to good use. Let's talk about a few other businesses that navigated covid particularly well. So Moriarty's gem, aren't they were a thriving jewelry store and Indiana when the pandemic struck. The owner is Steve and Nancy Moriarty, knew that sales would be tough going into the pandemic as a brick and mortar store, but the company didn't waste any time. Almost immediately they pivoted into a new market space and began producing something new, youtube live streams. Rather than relying on jewelry sales alone or, worse yet, giving up entirely, they decided to run weekly streams in which the Moriarty family featured special stones from their vast collection. And what do you know, the simple pivot did the trick. With the extra publicity, Moriarty's gem art began making thousands of dollars in sales. One show even fetching a wopping twentyzero dollars in sales. In the thick of the pandemic, giving up is an option. Bankruptcy is an option. Sometimes one or both of these are called for, especially if you need to be focusing on family issues or other struggles. However, you should always be looking to pivot rather than to drop off all together. Sometimes all takes is a slight change in your operations...

...in order to deal with a crisis that arises. Here's a few other tips. So we have Vincenzo Goozos tips. We have a great case study, but looks at a few other tips for Crisis Proofing Your Business, prioritizing and maintaining your customer base. So in times of crisis, it could be difficult to track all your responsibilities, but it's crucial that you stay in touch with your clients and can he need to serve them as best you can. You can do this by staying in communication via regular email and social media updates, offering sincere apologies for any services or products that can't be fulfilled during the crisis period, coming up with alternative ways of serving your client base where possible, running loyalty programs to remind your customers that they are valued, even in times of crisis. The majority of revenue comes from just, usually twenty percent of your clients on average. That's a pretty common law. The eight twenty rule your committed customers who trust the product or service you provide. These are the ones that pay your bills, these are the ones that usually make up the majority of your revenue. So keep these clients on your side, be empathetic with their life situation and you'll have a solid base to return to when the crisis is averted. And not all crisis is are covid. There's a lot of temporary, short term crisiss or. These rules and these ideas still apply. Reduce unnecessary expenses and cut down where you can. However, people is not where you cut down. So in all the examples that I just gave, actually there was very few layoffs. busness is approached covid differently, but in Vincenzo Goozo's case there were almost no layoffs. So he found other uses for the people that he had on his team and in his company. It's fair to say that money is a primary concern when a crisis strikes your business, as it always is, which is why cutting cost where possible might just make things a little bit easier. But what you do have to do is you always have to lay out your budgets understand what you can do without. For example, are their software subscriptions? Are there maybe ancillary team training,...

...events, business related services that you don't need right now? Are you able to maybe pause some of the orders or the supplies that you have coming into Your Business? If you don't need them. I know in particular, Vincenzo Goozo renegotiated his leases with landlords for the for the actual period of the pandemic. There's a lot of places you can probably cut costs when times are tough. I would always focus on cutting things that do not impact another human beings life, if possible, which means that you're keeping your staff on and you're keeping them you know they're keeping them paid and fed, and then you look for the other things that are allowing you to do business, maybe comfortably, maybe you scale some of those back, but try and cut unnecessary expenses, but try not to cut people, especially if you do have a great rebound strategy in place. I think the people and businesses that cut people are the businesses that don't properly have the foresight and don't have a rebound strategy in place, which means they're not great at building businesses and times of crisis. Maybe they're just great at building businesses when times are good, which bags the question are you really good at building a business? Lastly, communicate with your team members. So this is arguably one of the most critical steps that you can make when whethering a crisis or a financial storm. So when things go wrong, it's hard enough to navigate rough waters without losing your communication lines. You can maintain your open communication by having scheduled meetings every single week, if you don't have them already, or each half week, to discuss developments, updates financials. I'm a big fan of radical candor, sending out regular messages as soon as anything changes and being totally transparent about the good, the bat and the downright ugly, even if it is we have six months runway until the lights are no longer on. Obviously this is something that you should communicate because that will get your team, that will galvanize your team and ultimately, at the end of the day, if you can't pay their salaries after six months, they deserve to know ahead of time, letting your employee, your colleagues, know that you're there to support them, that they aren't facing anything alone.

You have to make sure your team knows what's going on at all times. There's no point in hiding the facts. You're in this together and with transparency you can support one another until you're out the other side. So nobody prepared us for what we went through in two thousand and nineteen through to two thousand and twenty two. The struggle is by no means over for businesses. The entertainment industry is still trying to regain its footing, small businesses are starting over from scratch. Tourism is still nursing its wounds. But that being said that, this is a necessary conversation to have, not just for businesses struggling through covid nineteen, but also for crisis that may arise in the future. How do you handle another recession of the same scale or even worse? So thankfully, you learn from people like Vincenzo Gooza, who are inspiring us to take a resilient but optimistic approach and situations where the worst might be expected. With his insights and extra tips, hopefully you've learned something that can help you better future proof your business so that when the next crisis hits, you'll be more prepared and you will handle that and navigate that a little bit more eloquently. I hope you enjoyed today's video. If you found value in it, please please hit that like button hits subscribe. Leave a comment below with any other business topics, any other lessons you want to learn over I'll try and get into it. Have a great day, see you soon.

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