ASHLEIGH HINDE, CEO and founder of contact lens company Waldo, on the difficulty of balancing the people, payments and profits equation during tough times
WITH THE many impacts of COVID-19, the route to profitability looks different for every company as established practices are all but thrown out.
For direct-to-consumer start-ups, the need to consistently innovate and adapt — while responding to consumer requests and ensuring a profitable business — is key. Our journey began in 2017, but Waldo has grown from three people in a small London office to an operation with bases in the US and Europe and a team of 17.
Within the first month of lockdown, there was a 50 percent increase in UK companies going bust. That figure has risen, and job losses have been almost universal as a way to keep profits up. But when the team is key and cutting your workforce isn’t an option, there are other ways.
With marketing often the largest spend, this is a good time to engage with it and thin out the cost. Reforecast this expenditure to focus on core channels, and ensure that “test spend” isn’t used without beneficial ROI.
Another thing to look at is third-party spend outside of your organisation. Where you can, renegotiate costs on your contracts. Some may be set in stone, and in times of worldwide crises it’s likely that those companies you’re working with are also modifying their work processes.
Try to work from biggest to smallest when renegotiating to maximise profitability. With logistics and operations, these cuts also have a knock-on effect on improving gross margins and strengthening company profits over time.
This can be as little as moving agency contracts from hourly rates to monthly retainers, giving the business owner more control over the spend, or renegotiating terms.
Do an overhaul on your procurement processes and start getting competitive rates from other suppliers too; now is the time to be creative. As far as possible, aim to pay for services and goods after you have recouped revenue for that service. Paying up-front puts the business at unnecessary risk.
A company is held together by its workforce and the culture that has been created, and this is more important than ever. Working from home and not being part of an office environment inevitably makes relationship-building trickier, but it’s also an opportunity to get to a deeper understanding of your colleagues. It’s also an opportunity to get to know colleagues you wouldn’t usually socialise with.
There are lots of “free” ways to build team culture which don’t involve lunches or events. It’s time to double-down on work culture and invest in motivation and support. There’s no end in sight, and things won’t be bouncing back to how they were in January. This needs to be brought to the forefront of strategy.
Consumer behaviour and buying habits will change, and it’s important to be agile enough to move with those changes. Focus on core strengths and build relationships to get the most from people. When suppliers, investors and customers feel bought into the mission, they are far more likely to support you in the long run — especially when times are tough.