Monthly Archives

April 2020

Stability amid the coronavirus crisis: Lessons from Parallel Workshop Architects

By Interview No Comments

When the economic effects of the global coronavirus pandemic hit Australia, Melbourne based architecture firm Parallel Workshop Architects went back to business basics. 

They’d experienced the effects of uninformed decision making in the past, dealing with the costs of high growth, and didn’t want to make similar mistakes again. 

Founders John Xu and Max Bi saw the global job losses, business uncertainty and could see the scale of the impact the crisis was likely to have. 

“It was like everyone just got hit in the face,” Bi says.  

Calm in the face of coronavirus crisis 

Instead of reeling from the shock, the team sat down to look at the state of their business, consulting their custom Ravit Insights financial models. 

Xu and Bi use a three speed model, consulting one daily for business as usual activity, another each month to see how the business is tracking in a 12-month time frame, and the third reviewed annually to assess where the business needs to grow and expand.  

In response to coronavirus, they went through the model looking at their business pipeline, assumptions and cash buffer, checking expenses compared to revenue and made scenarios to plan for what could happen as the crisis continued.  

“This was a key meeting that we had,” Bi says. “It stabilized us and allowed us to give stability to our team, which will help with productivity and maintaining focus in our business and our staff. We were also able to see whether or not we’d be eligible for government stimulus packages. 

“With so many factors out of our control, it is unclear for us how we’d deal with this unprecedented situation or run our business without this model. Basically, we’d be panicking. 

“We have a couple of months runway which will take us into next financial year working through business as usual, but from home. We’ve also set certain triggers that will ensure we’re prepared if our business circumstances begin to change.” 

Guided by values 

That an architecture firm was so focused on maintaining a stable financial position is not an accident.  

“We’ve both been employees, been in a recession in the GFC and dealt with the fickle nature of some business leaders. 

“Which is why when we started our business we had three core values that we still hold as our guiding principles: Value – to our clients, Family – ensuring our staff are treated well and finally Responsibility – to be in control of our business,” Bi says. 

“The latter means that we have always considered it our responsibility as business owners to understand our financial responsibilities to protect our staff, clients and ourselves. I can build a big or a small brand, but those who help us, those people are what’s important. 

“We have a fast-growth business, so getting a financial model to understand that growth and how business operates has been essential.  

Residential development by Parallel Workshop Architects

“We didn’t always have that. The first big phase of growth saw our business go backward because we didn’t manage our resources properly. The founders were working too hard and it took us too long to bring in support.” 

Preparing for the unknown 

Without clarity on coronavirus, the Parallel team is sticking to what it can control, using the model as a guide on how to approach the coming months. 

“We have key projects we’re working on now, and are working hard to ensure these remain stable,” Bi says. 

“The small changes are easily managed as we know through our model that we can forfeit profit or cut some expenses, because we know that our team is the most important part of our business to maintain.” 

But they will need to deal with the change in business and economic climate. 

“Right now we definitely see a slow down in new business, but there will be a lot of people looking for opportunity when the economy starts to recover,” Bi says. 

“We know that we are stable, and, again thanks to our model, we have clarity on the length of the business development cycle and what we need to consider in the coming months. 

“It’s unlikely we’ll get much broader certainty over the coming months, but it is comforting to have the processes in place to give our team and business as much stability as we can.” 

More on Parallel Workshop 

Parallel Workshop Architects is a Melbourne-based boutique design house specialising in architecture and interior design, creating spaces that enhance lifestyle and experience. 

As an emerging studio of passionate creatives, our commitment is to provide a bespoke approach to every project, delivering an identity while maintaining value to each unique design. 

With an enthusiasm in contemporary design, the PWA team challenges the status quo by merging technology, space and modern living into design approach. 

Residential development by Parallel Workshop Architects
Private residential project by Parallel Workshop Architects
‘Wonder Bowl’ interior by Parallel Workshop Architects (Photographed by Peter Benetts)

Beyond Government subsidy: How to keep your staff employed

By Business Advice, Journal entry No Comments

As a business owner, being in charge of your staff’s livelihoods is a responsibility that can lose you sleep, even in boom times.

In the current climate, with many businesses reeling from revenue or business model hits due to the Covid-19 pandemic, keeping people in jobs is a genuine crisis.

The Federal Government has released a wage subsidy of $1500 a fortnight per employee with the aim to keep thousands in work during a time where we are in “social hibernation”.

Through our financial modelling, we help businesses understand what will happen in varying situations.

For many industries, hospitality, fitness and retail, dealing with such a sharp decline in revenue is almost unprecedented.

To keep businesses operational or even viable in “hibernation”  there are a few solid strategies that can help and hopefully keep staff on board through the hard months.

Can your business access the JobKeeper subsidy?

Businesses and sole traders with revenue under $1 billion will be able to access the JobKeeper subsidy of $1500 a fortnight to support employees if their revenue has fallen by more than 30 per cent (of at least a month).

The Government has also introduced discretionary measures to allow for pre-revenue, high-growth and businesses that have not been in operation for a year.

The best resource to keep up with changing information for these and other measures is direct through Government websites. We also recommend contacting your accountant for more information specific to your business.

Cut costs

Depending on how the current economy has affected your business there are probably areas that ordinarily would be considered essential that must be cut at least temporarily.

Redeploy: If you are a larger business, you might be able to move staff into different roles where more help is needed.

Leave: Other businesses are reacting by asking staff to take periods of leave, both paid and unpaid, through the pandemic period to balance their cash.

Re-negotiate terms

It is essential during these months of uncertainty to assess whether your business has a cash flow, revenue or other problem.

If it is cash flow related, speak to suppliers and other stakeholders about different terms to cope through the pandemic.

One area under focus is commercial rent with landlords moving to defer rental payments. Some co-working spaces, including the one we are based in Stone&Chalk, have offered three months rent reprieve to assist businesses through the crisis.

Flip your business

If we told you a month ago, that Attica, one of the world’s 100 best restaurants, would pivot into a bakery to survive, you’d have laughed at us.

But it has, and many other strong brands in the restaurant business have likewise flipped their models to survive through an uncertain period.

Many of us can look to these savvy business owners for inspiration on how we can change and adapt to the rapidly evolving situation.

But keep your eye on the future, a crisis can push a business to change in positive ways and ensuring you think long-term will help ensure you make the right choices now.

Charles Darwin said it best: “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”

Keep communicating with your team

In this period of social distancing, keeping connected to your team is important. You don’t want to lose good staff through lack of support as they’ll be essential to your recovery when things begin to pick-up again.

Although a time of uncertainty, giving your team updates to keep business progressing, and the team informed about their potential job security will help not only producitvity, but their personal wellbeing.

There is no doubt that no matter what your business is, it will be a time of evolution and change. Before making major decisions it will pay off in the long-term to return to your key business drivers and fundamentals.

We also have responsibility, and now incentives, to keep our teams together and staff employed where we can through the Covid19 crisis.

Understanding where your cash flow and growth has come from in the past, and where it is likely to pick up when the economy begins to recover will help guide your choices so they are beneficial to your business now, and when the good times come again.

Contact us today at info@ravitinsights.com.au