Economic Knockout: Boxing Strategies SME Survival

The businesses that are fighting fit during the challenges of the ongoing pandemic are those that have the agility to shift strategies quickly and efficiently in response to changes in the operating environment.

By Engel Schmidl

A landmark study by UK-based academic Dr Rachel Doern has found that small businesses that were quick on their feet and ready to change “boxed” their way out of lockdowns.

Doern, a senior lecturer in entrepreneurship with the Institute of Management Studies at Goldsmiths, University of London, observed how small businesses handled crises during the early stages of London’s COVID-19 lockdowns. She found their initial responses to the pandemic put them in a better position for longer-term recovery.

Doern found businesses that were agile and proactive emerged healthier after lockdowns.

“In an unfolding crisis such as the pandemic, entrepreneurs move back and forth between behaviours focused on containment and recovery and on achieving relative stability,” Doern says.

“I would expect, and my research suggests, that small businesses ‘hop’ between these strategies in a bobbing and weaving fashion that is akin to boxing.”

The study found small businesses increased their chances of survival by monitoring business functioning and detecting risks (checking vitals), initiating quick defensive moves to absorb damages and defend against additional threats (blocking), undertaking activities to avoid further damages (deflecting), and planning the next move and managing expectations (developing tactical awareness).

“I think businesses, especially small businesses, have learned about what it means to be not just reactive but also proactive, to anticipate what happens next,” Doern says.

More than dollars and cents

One Melbourne-based business owner who instinctively understood the need to adopt an agile fighting stance is Mark “The Hammer” Castagnini.

Castagnini, the founder and head instructor of Hammer’s Gym, is a former Australian cruiserweight Muay Thai champion and president of the Victorian Amateur Martial Arts Association.

Like many other Victorian fitness industry business owners, Castagnini was hard-hit by the extended lockdowns. He credits a disciplined approach to savings as a major factor that helped his business through the lean lockdown period.

“Before COVID, my business had very successful growth. Coming from my generation, the idea has always been to have a big ‘war chest’. We had good profits, and I always banked most of that,” Castagnini says.

Castagnini’s initial reaction to the lockdowns was to focus on the things he could control. He used social media to keep in touch with gym members and maintain strong customer relationships. He also took the opportunity to do some maintenance and renovation work on the gym, partly to keep himself busy, but also to show members that the gym would be better than ever when they returned.

Castagnini is confident about the future of his business but he is concerned about the industry at large, including falling demand.

“The broader effect of COVID is about more than just dollars and cents,” he says. “I know a lot of other businesses in the fitness industry are crippled.”

Fighting fit

Jarrad Young CPA is probably the most fit accountant you will ever meet. Director of Gold Coast-based Cordner Advisory, Young is the Guinness World Record-holder for completing the most push-ups in one hour. An important part of his rigorous physical training is ring work at his Matrix Boxing Gym.

“When I do my push-ups, I think of it as a 12-round fight,” Young says, and he certainly sees a lot of parallels between boxing and business survival.

“Putting in place business resilience plans early for things like cash flow was vital,” he says. Young says flexibility was also crucial for SMEs to pick up on new revenue streams or minimise outgoings during the pandemic.

“The businesses that are likely to survive are the ones that adapted to the new environment. They did things like utilise remote work and technology to minimise their costs. The businesses that adopted these kinds of strategies have adapted to what has come since. They are, in many ways, better placed to manage expectations and engage in forward planning.”

Resilience in adversity

Doern says it has been encouraging to see how quickly and how well many business owners adjusted to adversity to help them “go the distance”.

“My findings show that crisis management isn’t always linear, despite what previous crisis management models infer,” Doern says.

Her study shows no single path for businesses to take during a crisis such as COVID-19. Like boxers in the ring, business owners need to know when to zig and when to zag, especially in times of uncertainty.

“One of the main things was just how quickly and how well we as human beings can adjust to adversity,” she says, “but also that businesses can adjust quickly too, although not all will do so successfully.”

CPA Australia Asia-Pacific Small Business Survey 2020-21

What were the top 5 major actions that small businesses that did not grow or shrank in response to COVID-19 (all markets):

What were the top 5 major actions that small businesses that did not grow or shrank in response to COVID-19 (all markets):

Of the high-growth small businesses, only 5 per cent did not make any major changes to their business in response to COVID-19, compared to 17.1 per cent of businesses that shrank or did not grow.

Of the high-growth small businesses, only 5.6 per cent did not seek any external advice in 2020, compared with 25.1 per cent of businesses that shrank or did not grow.

Source: https://www.intheblack.com/articles/2021/05/28/economic-knockout-sme-survival?utm_source=exacttarget&utm_medium=email&utm_term=All%20Subscribers&utm_content=FEATURE+%7c+AUS+%7c+Economic+knockout%3a+Boxing+strategies+for+SME+survival&utm_campaign=CPA+Update+-+June+8_7-June-2021