Start the Conversation
Listen to this episode here: Start the Conversation
The Start of the Journey
Eddie has been in the accounting industry for more than 30 years and has experience with both CPAs and the Institute of Chartered Accountants. He has taken an interest in this industry with a particular focus on insolvency due to a particular situation that happened earlier in his life. Eddie’s father immigrated to Australia from Italy in the late 1950s and worked in construction. In the late 1970s when Eddie had just got into university, his father was unfortunately retrenched together with many other people and left without any pay.
This didn’t seem right to Eddie, he did some research and found that there are rules around retrenchment. This was the first time Eddie became interested in the insolvency process. He met up with his father and a few of his colleagues that had been made redundant and spoke to their manager. He was able to influence the directors to make payments to the staff. He recalls that it was an amazing feeling that a little research could lead to a big impact on people’s lives.
About 15 years ago Eddie helped set up the Advisory Council which helps professionals in the industry with challenging issues.
Eddie says it’s important to set up the right kind of structure, either in trade re-structure or merger, as it brings quite different outcomes in court. He gives an example based on the recent changes in the Corporations Act around employee schemes. If a business is found to defraud employees, those provisions apply some of the highest penalties. The legislation came in just before COVID hit; many people may not be aware of it
Early Warning Signs
Eddie says there are some early warning signs when a business is doing something wrong. When you’re looking at a business you need to consider different lifecycle stages. For a start-up, the early warning signs could be that they don’t have sales or cash generation. You will need to solve these issues before moving to the next stage of the lifecycle.
For a business that’s maturing they’re facing different issues. How do we generate new revenue? Would that require a totally different approach? What gets promoted in the marketplace? All these issues need to be solved. Eddie concludes that every business needs a strategy and needs to deploy resources.
Soft Question Approach
Eddie usually goes with his ‘soft-question approach’ when trying to identify his clients’ needs and problems. He uses open-ended questions to obtain clients’ thoughts on their own strategies. Eddie points out that clients nowadays are different from a decade ago as they have different needs. All practices need to adjust for their individual clients and. if they are still doing the same thing as they did ten years ago, it is probably time to develop a new service line.
Eddie suggests spending time documenting conversations with clients, as it’s helpful with following up. By documenting the conversation It can help you refocus and pick up on things you may have missed. We should not think of it as a burdensome administrative task but as an opportunity. You can send a newsletter addressing specific issues to your clients, based on these documents. This is the ‘extra mile’ – the little things that help you win the client.
Think Differently in a Hard Time
The current lockdowns and the pandemic have left many businesses concerned. Everyone is talking about ‘cash is king’, but exactly how do we work it? Sometimes the advice is ‘you need to slow down the payments and tell your debtors to pay earlier’. Eddie says that if everyone is doing that, no money would be circulating, which is a big issue. Eddie thinks it’s better to try to get into ‘profit mode’ by reviewing business strategy.
Eddie gives an example of an Italian restaurant in Canberra. When the lockdown happened, every shop shut down. This restaurant turned into a delicatessen which has proven successful during the pandemic.
A Piece of Advice
Eddie shares that bankruptcy is an interesting space, there have been some changes in recent years, but some parties still see bankruptcy as a stigma. When a business gets bankruptcy the owner’s personal assets are on the line. However, it’s an opportunity to say, ‘what can I do now to get that next start?’ Voluntary bankruptcy is a tough decision, but it provides an early exit and a chance to start again.
Eddie has his personal website www.eddiesenatore.com, and he encourages our audience to contact him to start the conversation.