Meet Electra Govoni, Owner of The Alternative Board of Boston - Northwest, and Rudy Scarito, President of RS Finance & Consulting. They both are Boston specialized leaders in the business management & consultancy area, and the finance & investment area respectively.
What are their thoughts about the COVID-19 impact on the Massachusetts business community? How can managers better administer cash flow? What can C-levels do about their marketing & sales strategy? Can business leaders fight stress? What should business owners keep in mind to preserve their companies' value?
Let's dive into this episode with Electra and Rudy to know how Massachusetts' SMEs can overcome the COVID-19 crisis.
Check the Greater Boston Chamber of Commerce webpage for more related content.
Voice-over | 00:03 > Because of the continuing spread of the Coronavirus, businesses are going through uncertain times. How are business leaders dealing with it? What actions are they taking, what recommendations do they have? Let's hear real-world experiences on our special series of the Kaizen podcast where we will get tech and business insights from top leaders. Show notes can be found at podcast.kzsoftworks.com. Let's get started.
Fabian | 00:33 > Welcome everyone. I am Fabian co-founder of Kaizen Softworks and today we are hosting the show together with Javier. How are you doing Javier?
Javier | 00:41 > Hi Fabian. It's a pleasure to be here and thanks for inviting me to host with you.
Fabian | 00:45 > Yeah, sure. So nobody should be facing difficult times alone. For this reason, in today's episode, we are going to talk about the Massachusetts small and medium-sized enterprise situation. We will discuss the COVID-19 impact on them; difficulties they might be facing due to it; as well as useful insights and recommendations to help them better navigate these issues.
Javier | 01:09 > And a good question to start the show is by asking ourselves how important small businesses are. So, for example, The SBA Office of Advocacy estimated that during 2019 at least 45% of US businesses were considered small. Also, 45% of US employees worked in them.
Fabian | 01:31 > What about Massachusetts?
Javier | 01:33 > For Massachusetts, more than 90% of businesses were considered small, and also 45% of employees worked in theme.
Fabian | 01:41 > Yeah. There's no doubt that COVID-19 it's hitting America's economic heart hard, really, really hard. The Massachusetts office of labor and workforce development announced this April, that unemployment rate in the state Rose up from 2.8 at the beginning of March to 15%.
Javier | 02:00 > That's a lot.
Fabian | 02:01 > Yeah. The hardest-hit industries are services, food, construction, arts and healthcare.
Javier | 02:07 > But even though this situation looks dire, government and community help it's on its way. For example, Congress passed the CARES act. In specific, the Paycheck Protection Program was designed to help businesses in financial distress to avoid layoffs and furloughs as much as possible. On the other hand, the Boston FED is cutting interest rates to speed up the economic recovery. On the community front, The Greater Boston Chamber of Commerce has built a useful webpage with the latest news, relevant info and helpful resources for all businesses.
Fabian | 02:43 > Yeah, there's a lot of information in there.
Javier | 02:46 > Yeah. We have been following it to prepare this podcast and we sincerely recommend you to check it out as well. Because the goal of this episode is to collaborate as well with the Massachusetts business community to cope with the COVID-19 crisis by sharing useful insights and advice from business leaders and experts.
Fabian | 03:07 > To discuss all this information and what is happening, we are here today with Electrical Govoni and Rudy Scarito. Welcome to the show?
Rudy | 03:15 > Thank you.
Electra | 03:16 > Thank you.
Rudy | 03:17 > Great to be here.
Fabian | 03:19 > Cool. So, Electra is the owner of the Alternative Board of Boston Northwest and Rudy works as President of RS Finance that is a merge and acquisition firm.
Javier | 03:35 > So Rudy, can you briefly share with us how you think this situation has impacted Massachusetts and Boston businesses?
Rudy | 03:44 > Sure. Absolutely. It's bad. There's no doubt about it. When the economy is shut down artificially in the context of a pandemic, like we've seen it's not good for anyone. Some businesses have been affected more than others. For example, you mentioned construction and hospitality and some other industries. Some businesses on March 16th were operating in normal course way and then on March 17th, their businesses had been completely closed as a result of the government-mandated shutdown. All Boston construction sites, for example. So in those instances, it's really devastating for the business owner because all of a sudden employees who came to work one day are now either need to be laid off or furloughed until there's money available to keep them on, or even better business to work on. And that wasn't the case, obviously, in various industries. Other companies though, some were declared essential businesses and because they were, quote, essential businesses, they could continue to operate. And in some of those instances I've seen companies which have really not felt any adverse effects from COVID-19 other than the decimation around them. But their businesses themselves have held their own during the process because they continue to operate.
Fabian | 05:23 > What about your thoughts, Electra, about the situation and the impact?
Electra | 05:27 > Yeah, it's been very difficult, and as Rudy was mentioning, there's a wide range of things going on. You know, to the shutdown, to figuring out ways to modify your operations, within the framework that the government is allowing, and you are essential or you're not, as well as how do you be a hundred percent productive, but you're functioning a hundred percent virtually. And for many, this was something that was considered sort of a business continuity plan and they all of a sudden had to figure out, okay, we've got to do this. And it's also interesting what people are finding to say, how effective can they be being a hundred percent virtual. So while it's a difficult climate, there's a lot of uncertainty, which has its own challenges. When the road in front of you, you don't feel as if you have great visibility, It causes things to contract. People are putting off making longer-term decisions. Budgets are being held tight, which means you're freezing projects in some cases, which again, continues to have a ripple effect on how many people are not getting paid because of things like that. So, when getting a path to reopening and a path to figuring out how do we gain more confidence in how we're going to work together in the future, I think there's a really critical thing to start to see, new confidence being made, in businesses so that they now have a plan that they feel more sure-footed about executing.
Javier | 07:16 > So, as both of you were mentioning it looks like, the State is going through a difficult economic situation right now. So to cope with this, many government institutions have put in place credit programs, for example, Federal Reserve Bank is working in the yet-to-launched Main Street Lending Program designed to help credit flow to small and medium-sized businesses. Meanwhile, the regional of local governments have also put in place great programs. For example, the Small Business Recovery Loan Fund. Rudy, given this whole panorama, what are some actions business leaders can take to better manage cash flow?
Rudy | 08:04 > Well, the first thing business owners should be thinking about is how do I minimize my cash outflow? How do I keep my costs low and make sure that I'm only spending on essential aspects of the business to keep it running in a professional and efficient manner? So, keeping costs low and cutting discretionary spending It's certainly top of the list. But to your point, a lot of these programs that the government has made available should be accessed. The government designed them specifically to keep businesses running and they've made the capital available in a meaningful magnitude based on the size of the business that's borrowing it and also on really favorable terms. So the interest rates tend to be lower than a company in distress might otherwise obtain. So the interest rates are quite favorable. I think I read three and a half or three and three-quarters percent for some of these and really long duration money. So for example, the payments on these loans can be deferred for six months or longer depending on what loan you access and then you can pay them off over a long period of time. So I've encouraged business owners that are essential businesses and even ones that are not, they feel like the demand in their end markets still exists. I've encouraged these business owners to access the capital so that they can keep people employed, keep their operations running, and take advantage of the business opportunities that they still see. So, it seems like it's probably the fastest and most efficient way to keep businesses going during the crisis.
Fabian | 10:06 > Yeah. It's time for taking like really key decisions in your business and another decisions, which I believe are key, are the sales and marketing strategy, right? And as a business leader that I am, we always plan in advance for those things. But a situation like the COVID-19, makes you change the whole thing from one day to another. So, one of the key decisions should be what do we do about our sales and marketing strategies in this time. What do you think about Electra?
Electra | 10:51 > Yeah, it's a great question and it comes up. I think every time I'm speaking to a client or a group of clients, you know, when it comes to marketing, you always have to start first with really thinking about who your clients are, who are the people you want to be speaking with, and really what's the appropriate message during this time. And you don't want to be tone-deaf, and for many, getting that basic clear understanding of what it is to walk in the shoes of your clients, which is a very strong marketing technique outside of any COVID-19 strategy, the more you know about your clients, the more you understand what challenges they're facing and the better position you are to speak with them, whether in any sort of environment. So really evaluating what your clients are going through, and then connecting with how do you then serve them? How do you then help them at this time? When we're in a time like this, which you could, you know, kind of view in some cases survival mode or a time of great scarcity, often, you know, the impulse is to kind of contract and think, I can't possibly have these conversations. However, if you come at it with the mindset of like, first of all, I wanna, I'm here as a partner with you. I'm here to help. Can we put our heads together and perhaps even innovate together to find a path forward that serves us both? These are interesting moments to have those discussions and because it is uncertain times or even unknown times, I do think one of the pluses is that people can walk away from things that they've been chained to as not possible, too heavy, when it may be your only path forward is to figure this out and you much more willing to be in a creative moment. And how wonderful to be a creative partner with someone who's there, one showing support. But I'm helping you potentially create a new path forward. So as we think about, you know, sales as trying to, sell something that someone doesn't necessarily want, but here you're saying I'm here to help. I'm here to create a stronger future, let's do this together. That's a great way to have some conversations and whether the conversations are planting seeds for tomorrow when, say, funding gets a little bit easier or, a great way to strengthen relationships by knowing that you're there, you're understanding your maybe a sympathetic ear and that you're there with them on the same side of the table and helping to build something. It's a good time to evaluate your marketing strategies and understanding how is it that you speak to your potential clients. Not all strategies are worth pursuing right now. Some are better than others. You know, typically people have some hunting strategies and some farming strategies. They may view, content types of outreach and social media outreach may be a better thing to be focused on and a better way to spend your money when maybe if trade-shows, for example, was a big introduction for you, that's not going to happen. They may go virtual, but you have to look at where to invest. So, the opportunities are there, not all industries are affected similarly. So, it's also good to keep your eye on what's happening in industries and how is it that you can engage, and engage in partnership and in with sort of a service mindset. And I think you'll have some great conversations if not deals.
Fabian | 15:24 > Right. I think that, if I wanted to summarize or take the main idea of what you just said, I could say that empathy should be what you should be doing with your clients in this moment.
Electra | 15:39 > Yes, yes. And, honestly, empathy is a great way to build really strong relationships and we know that that's a critical thing regardless of, you know, different forces of what's going on the economic ups and downs. Having bulletproof relationships that's gonna sustain you.
Fabian | 16:02 > Yeah. So, as a CEO that I was, I believe that managing stress was part of my daily life and situations like the coronavirus, which are, we just said these word too many times today, I think that uncertainty probably is making, driving a lot of stress to a lot of executives out there. So an important question for these business leaders, and our recommendation for them will be how to better manage that stress related to work and balance. They collide with family, friends during these times and stay sharp and take the key decisions that they should be taking on their business, Right? So what do you think about it, Electra?
Electra | 17:02 > Well, you know, let's start with the fundamentals. You know, you mentioned a number of them. It's sort of like putting time in your schedule to see that you are sleeping, that you are eating properly, that you're getting up, exercising, getting out of the house, and you know, clearly staying safe. But that's a very fundamental basis on how do you physically give your body the strength it needs to deal with what is and can be a very stressful moment. And different people use different ways of being, to sort of deal with stress. You know, some people choose vigorous exercise, other people choose meditation. So it's a time to look at what practices work for you and make sure that you make the time to do it. You know, often when you talk to business owners, they tell you they don't have the time and they deprioritize taking care of themselves, and it's a mistake because you're the most critical person in your business and you need to be well. Other ways of helping is making sure that your day has a decent structure so that you've given yourself the time to, you get up at a certain time, you exercise, you build in time to do these helpful practices. You build in time for work. And you build in time for you to think about, gathering the information you need to make sure, short term and longterm, or just like, let's say medium-term for now, decisions get focused on them and get taking action. Because the more actions you start to take and let's say it's always good to work iteratively, you take action, you collect information, you take corrective action and you keep moving forward. That in itself is a stress relief. There's nothing like feeling like you're taking helpful action and things are moving forward. And then I also want to advise do not isolate yourself. Take the time to talk to people that you trust. Build a circle of trusted advisors. I bring together peer advisory groups. It's a great time to talk to people who are potentially sitting in the same seat as you, maybe running a company or a senior executive in a company, and having a place to share your worries, your challenges, your opportunities with folks that can help you sort it out and help you think it through. So, it's not a time to go it alone. So I'd say seek, seek a place where you can have these great conversations and it again helps you to build that plan that you can use to go forward.
Javier | 20:13 > I think that's a pretty good advice. But before moving on, let's quickly thank our sponsor for letting us record this podcast with Electra and Rudy.
Voice-over | 20:23 > Most of the companies fail due to running out of money. Tech-based wages are higher than ever. On average it takes six months to find the right talent in the US. These are some of the reasons why 65% of the US small businesses will outsource services to other companies during the year. Nearshore options, like Kaizen Softworks, tackle all these problems. Find out more at kzsoftworks.com.
Javier | 20:51 > Back to this episode where we share useful insights and advice from our guests, Electra and Rudy, on how can the Massachusetts business community cope with the COVID-19 crisis. So during this time, investors might be looking to acquire or maybe merge with other businesses at a low price. Maybe they will allege that this is due to the economic crisis context we are living in right now. So, Rudy, what do you think Massachusetts business leaders should know about to preserve their company's value?
Rudy | 21:28 > Yeah, it's a great question, and you've articulated it well in saying that some investors are looking for bargains right now. Companies that have been impaired by the COVID crisis or that need, for one reason or another, need to sell or need to take capital. So the way that a seller or a company raising capital can protect its value is to focus on the company's key strengths. In every company. You'll find that there are some things that the company does really well, core competencies we call them, and other things that there are just in development and aren't necessarily the company's best features yet. And so in a time like this that you need as a business leader or as a business owner, you need to have all hands on deck focused on what do we as a company do well? Who are our key customers that rely on us and that we rely on? And obviously all customers are critically important, but you're trying to live to fight another day. So you're looking for ways to keep your costs low, keep your revenues high, and coming in. And that should be the first priority for any business owners is to generate more revenue than it has costs so that it can continue to survive. We talked earlier about taking the capital that's been made available by different governmental entities, whether it's Massachusetts based entities or the federal government, business owners should access that capital no matter what. The government's making it available to make sure that these companies can stay afloat. So why not take it? It's on very favorable terms. And I would go as far as to say that the terms being offered by these various governmental entities and the banks that are supporting these efforts are better terms than a business owner can will likely get from an independent private institutional investor. So taking advantage of these programs, staying focused on the company's core competencies, making sure you're serving your customers so they keep coming back and you're generating revenue and keeping your costs low. That should bridge you from this side of COVID to the other side of COVID so that you get through the crisis.
Fabian | 24:00 > Yeah, and getting through the crisis It's going to take a while, but taking those good decisions, the ones you are recommending will be crucial for every of the businesses in Massachusetts to stay healthy. Right?
Rudy | 24:19 > Exactly.
Fabian | 24:21 > With people trying to respect the social distancing, and many working remotely to avoid the spread of contagion, I believe it is suspected that workers' and customers' preferences may rapidly change, Right? So, Electra, how can the small and medium-sized companies, pivot their business, are there any opportunities to adopt innovation and stay competitive? I believe you already spoke about innovation. So what do you see is happening among your clients?
Electra | 24:56 > It is absolutely a time for great innovation potential. And it's not uncommon that we're talking about what's the silver lining for your business in this moment. And inevitably, every business owner that I'm speaking with says, Oh, here's what we discovered. Sometimes it comes in the frame of, you know, we were always too busy to try this, so there was something that was always a lower priority because things were good enough. And with this moment, the often sort of constraints on trying something new, the handcuffs are off because in some cases you don't have any other alternatives, whether it's working a hundred percent remotely. You know, for many, this was off the table because it was viewed we couldn't be productive unless we're all in the same room together. Well, we're finding ways to be productive that have nothing to do with being in the same room with one another. You know, sometimes it's finding a new way to deliver something. But one of the most impressive pivots that I've spoken to with a business owner was someone whose business was providing, STEM-based camps for children. And they would also do adventures on cruise lines. So when you think of like camps and doing like the cruise business right now, it's pretty shut down. So almost 90% of this woman's business was, on hold for a second for right now. And so she was reading the tea leaves early in January and they had started to think about how do I create virtual offerings? What's a virtual camp look like? Still keeping with wanting to have a STEM type of education capability for her students. And so she went into overdrive ramping up what an online camp experience might be and also in this solicited help from, and this is one of those things that getting connected to your community and talking about the innovation that you're trying to make happen. She had people from MIT raising their hands for free because they have a lot of gaming experience to come in and help. And so the notion of how to pivot from having an in house business, that was very much you needed to be physically in a place to now having a virtual platform and running virtual camps was an amazing pivot. And all done with a ton of incredibly hard work in like four months' time. So she stands to be an industry leader. And so here is how does she come out of this. It's an incredible story.
Fabian | 28:05 > Yeah, for sure.
Javier | 28:07 > So, we have talked about the present, and also some immediate future concerns for business leaders in this episode. To wrap things up, I would like to ask both of you, if you can, for example, give us some recommendation for the Massachusetts business community in order to be prepared for another COVID-19 like crisis in the future. So, Rudy, would you like to go first?
Rudy | 28:38 > Sure, yeah. I think that we've gotten in business owners have gotten a lot of information from various authorities about what COVID is, how one contracts it, how to minimize the chances that you get it, how to be safe at home, how to be safe when you're in the company of others, how to be safe in the workplace. Even though the thinking on these things changes over time, as we learn more, I think there's enough guidance there that business owners can conduct their operations in accordance with the guidance and stay attuned to the guidance so that we can adapt as the thinking changes if and when it does. And so for example one of the companies I mentioned earlier that was deemed to be an essential business is a manufacturing company. So everyone has to go to work in order to, you actually have to show up on-site to manufacture, but they configured their plant so that they could maintain social distancing and they scheduled their production shifts so that they could do it. They could produce parts in an orderly way where you didn't have too many people doing, trying to access equipment at the same time, etc. There are ways to do it in an office context, like in the services business such as the one that I'm in or, or even the one Electra is in. And there's a way to do it in a manufacturing context, you can figure it out. So staying attuned to the guidance, being vigilant about being careful because all you need is one incident to scare the rest of your workers and that would, that would have really negative effects on your company. So being vigilant ahead of it and making sure that it doesn't happen is the best way to proceed to make sure that we can minimize future incidents of it.
Javier | 30:45 > And what about your thoughts Electra?
Electra | 30:49 > Well, one of the theories that we've talked about a lot is disruptive innovation. And while COVID-19 I suppose as a form of innovation as far as viruses go, not though the one where we're typically talking about, we're talking about the creation of the iPod or the iPhone. However, in that whole mindset around something disruptive happening, how do you position your business to deal with disruption? And one of the first set of advice might be that you create listening posts. So you create structures and methods in which you as a leader of your company get great information about what's going on, on the peripheries, what's going on in your clients so that you have great data coming to you as early as possible in a way to correlate it and understand it so that you're likely to be ahead of what's coming. And by positioning yourself, you're starting to build a capability of resiliency in your business because you are thinking strategically about what happens next and you're gathering data to make wise strategic decisions. You're building time into your, the way in which you work that makes your business stronger and smarter and more agile. The reason you hear people talk about coming out of a time like this stronger, it is possible because you've taken the time to build a stronger operating model, or you've eliminated like single points of failure. All of that makes your business stronger and you end up with a much stronger business and ability to deal with whatever comes your way, whether it's another COVID-19 or anything else. You've positioned yourself and you put yourself and your company in a position of strength.
Fabian | 33:07 > Yeah. I take one of your words from what you just said, I believe resilience. Is key here in order to succeed and be prepared for another COVID.19 crisis in the future. That I hope we don't have to face again.
Electra | 33:28 > I know none of us wanted.
Fabian | 33:34 > No Please. All right, so thanks everyone for listening to this episode. We have come to the end of it. Thanks Javier for hosting the show with me today.
Javier | 33:47 > It was a pleasure Fabian. Thanks to you.
Fabian | 33:49 > Yeah, It was great. And of course, huge thanks to Electra and Rudy for being our guests.
Rudy | 33:56 > Thank you for having us.
Electra | 33:57 > Yes, this was a lot of fun. Thank you so much.
Voice-over | 34:02 > Thanks for listening to the Kaizen podcast. This podcast has been brought to you by Kaizen Softworks. You can learn more about us at kzsoftworks.com.