The COVID-19 pandemic has had a profound impact on the world and business landscape. Government restrictions, health and safety challenges, and intense economic uncertainty have hindered many companies. However, despite the many roadblocks faced, companies are still demonstrating incredible resiliency and optimism.
To discuss how businesses can effectively mitigate unnecessary risk, increase profitability, and grow their businesses during a crisis, we partnered with Financial Executives International Canada (FEI Canada) to develop a webinar featuring an in-depth discussion with Dr. Sean Wise, celebrated business speaker, Professor of Entrepreneurship & Former Dragons' Den Advisor, and Mohamad Fakih, respected philanthropist, and CEO of Paramount Fine Foods. Mohamad Fakih successfully transformed Paramount Fine Foods from a near bankrupt restaurant to one of North America's fastest growing middle Eastern Halal food chains. While Dr. Sean Wise, has been an entrepreneur since the age of 13 and has worked in the venture capital industry for more than 15 years.
On June 23, our host, Peter Barnett, Director Large Market Sales Canada, at American Express Canada, spoke with Fakih and Wise on their unique business philosophy, strategies for optimizing cashflow and what companies should be doing and thinking about to successfully grow their business.
Peter kicked off the webinar by drawing on some valuable insights from our recent global research study around B2B spending, noting that nearly three quarters of business owners were optimistic about their business prospects over the next four quarters. However, with revenues not as stable or predictable as they used to be, businesses have also been forced to look at their expenses and cashflow management more critically. Understanding your business cashflow and doing the right things to keep it positive are critical to running a successful company. With positive cashflow, you’re not only able to pay off expenses, but also reinvest into and grow your business.
PB: What's your business philosophy and how has that philosophy driven the success of your business ventures?
MF: At the end of the day, business is all about the bottom line. Of course, you have to be diligent about managing your revenue expenses and how the business plan is progressing. You have to measure to manage, but attaining real growth takes a lot more than that. There are many different ways to make a profit as a busines owner; some focus on driving down costs, while others focus on short term actions. However, I think there is a better, more sustainable approach. I like to focus on the three Ps: people, planet, and purpose.
I'll talk a little bit more about people. So many people say that the customers should always come first. However, that’s not true for a CEO. For a CEO, our employees should come first. It's our job to take care of our people. To keep them happy, smiling, energized, and engaged. And to make sure that they have what they need so they can focus on the customers. I always remind my employees of how important they are for the business. Even with all the technology in the world, you still need people.
SW: I'm a macro person. My mother taught me that if it's going to be, it's up to me. In other words, if you want change, you have to be part of that change. So, if you see something you don't like, and there's a lot of other people who don't like it, you have an opportunity to solve that problem. And I think that really speaks to the role of entrepreneurship. Entrepreneurs see an unmet need.
My business philosophy from an investment perspective is to choose projects based on which customer segment or community I’m part of and what I have insights around. I've founded five businesses in my lifetime and only had two real multi-million dollar exits, but they were always about solutions to problems that I had.
During this pandemic, all the companies I’ve invested with are having cashflow issues. In dealing with those issues, we should try to identify the opportunities for change. The pandemic has proven that we are much more resilient than we thought. In a couple of months, we will celebrate, we'll hug each other. However, we’re only going to win if we come out of this pandemic with strategies that are mixed with purpose. If we don’t do that, we will not be supported by our staff or community. The bottom line is, if you have purpose in your company, your people will buy in more and your community will support you.
PB: This segues into my next question, which is around the crisis and resulting economic uncertainty in Canada and globally, and how it's impacted your business. Sean, as it relates to your businesses, can you see opportunities? And how has the pandemic resulted in opportunities for positive cash flow and working capital?
SW: I've had the opportunity in the last 18 months to touch base on a regular basis with about twenty of our portfolio companies. And they're all reporting the same thing, a decline in new revenue growth. Soon that decline could set them back. The second problem that many have experienced is the change to forecasting. It’s really helpful to be able to see what money is going in and what money is going out and that's only forecastable if things stay the same. When the pandemic hit, I think lots of people panicked.
I think the most obvious things people have done is try to decrease costs through negotiation and compromise. They tried to retain a hundred percent of the staff because humans are too costly to replace, and there's too much loss of institutional knowledge, culture, and community. It's better to have, for example, less Google ad words instead. Another thing that happened in this pandemic is there's been a handful of leaders, like my fellow panelist Mohamad, who have seen it as an opportunity to fill gaps. In a global crisis, the large Fortune 500 companies generally pull out of areas that are not core competent to them. They don't get into these side businesses, but those side businesses are opportunities.
PB: Mohamad, what are your thoughts on the crisis and how it’s impacted your business?
MF: We used to sell $5 million a month. It turned into $280,000 a month. So, what did we do? I'll never forget that first meeting with my team when we discussed this. I said, I want you to go and think about this and come back to me with a solution. While we work on this, the first order of business is to save the business.
This pandemic was a huge test to the mission of every single company. It was also a huge test to culture. In Canada, we need more CEOs talking about their noble mission and the importance of company culture. This is the time to invest in your company and people. As a CEO, a leader, a shareholder, you need to keep your mission in mind. If you lose who you are, then nobody will want to work with you, and no customers will support you. So that’s what we did. I said we’re not firing people; we’re building a new business. And we created a new, independent brand.
PB: How can companies start to look at and be better prepared for unforeseen challenges and mitigate those risks?
SW: I think this is something that technology can help with. There are two sides to this: visibility and mitigation. Visibility meaning do I have enough information. Do I know the who, where, when, and why? And do I have information about the cash that's coming in and out? Today, people have access to a much richer data set and using that data allows you to prepare for mitigation. There are always going to be unforeseeable things of course, but you’re obligated to protect yourself against the foreseeable, the things that you know are coming down the pipe.
I think as we go back to work and we influence our governments to help kickstart the economy, it's important to not just end up where we were before. It's important to end up where we should go. You have to be thinking about where your business is going to be in a year. For example, if you're a travel business, travel will come back, but will it come back in a different way? I think there's a lot of people ready to go back to work and that is going to lead to some very neat, niche changes.
PB: Mohamad, are you doing anything differently strategically to cope with an unforeseen crisis?
MF: I’ve kept moving and looking forward. It’s important not to get stuck in the past. Remember when you pivot, don't lose sight of why people bought into your company in the first place. Everything you do should align with your noble mission and why the people and community believe in your company.
The pandemic didn’t change our culture or mission as a company, but it definitely made us move faster. Since 2020, we launched three brands: a fried chicken company, pizza company and we made a deal with Rabba. Technology helped us create efficiency and focus on what’s important. It helped me manage my cashflow and supplier payments. But it’s important to remember that suppliers are your partners. You should be able to lean on them and they lean on you.
PB: Mohamad, do you have a question for Sean and Sean do you have a question for Mohamad? Is there something that you guys would like to discuss?
SW: Some people worry that in trying to save everyone they fail to save anyone. So, in other words when trying to keep everyone from drowning, the whole boat ends up going down. How do you reconcile with your senior leadership team that saving everyone isn’t putting everyone at risk?
MF: By having the door open and being transparent about cash flow with everyone in the company and executive team, people were showing up and asking to work four days a week and take a 30% cut. They came to me. They came to me because of the culture that we’ve built. I also made the decision to stop royalty on all franchisees. I will not win by having an extra $500,000.00 in my pocket if my employees are losing sleep from stress. I was never looking for money. My definition of success is happiness, purpose, and legacy, and to set an example for young people. My message here to everyone is if you have your door open to staff and you invest in your team, they will support you and come to you with solutions.
PB: Mohamad is there a question for Sean that you'd like to ask?
MF: Sean, did you always see yourself owning 20 businesses? What did you see? What did you feel?
SW: That's a great question. I'm the son of two entrepreneurs, and I grew up with very little. So I started my first business because I got fired from McDonald's and my parents said, stop complaining and do something yourself. Once I did that, I realized not only was I unmanageable, but that working for other people wasn't my style. So, I started at an early age and then later on knowing how hard it is for businesses to succeed, I wanted to diversify my risk. There will always be people who are struggling with things I've struggled with before and therefore I can help them on their journey a little faster, a little better. Did I always see myself as a university professor? No, but I always dreamed I'd be able to help the most amount of people and my way of helping is in the creation of businesses. And I've been fortunate enough to live in a country where there's so much opportunity if you have the willpower and determination to do the hard work required.
DISCLAIMER:
This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. The views and opinions expressed in this article are solely those of the individuals involved. It should not be regarded as comprehensive or a substitute for professional advice.