Outlasting the pandemic: Key lessons from startup survivors

You need only look at the latest figures to understand just how heavily the pandemic impacted Australia’s small business sector. COVID-induced supply chain issues continue to affect two in five (41%) businesses, and there are now compounding issues around difficulty finding staff (31% of small businesses) and increased operating expenses (46% of small businesses).

But entrepreneurs and business owners at large are a resilient bunch. They see opportunity where others see a dead-end, and this ambitious mindset is what led many SMEs to thrive despite the pandemic. Here’s how some of Australia’s most resilient small business owners actually grew over the past few years and how non-traditional lending solutions helped them.

Crashing income in the blink of an eye

When Hilary Holmes opened her first salon in Geelong back in 2016, she couldn’t have predicted that a pandemic would give her the impetus to launch her own beauty product range, Holme Beauty.

But even with a long-term plan for evolving her brand, Holmes was caught off-guard by the almost immediate devastation caused by the pandemic.

“Just prior to COVID-19 I had a team of 15 and we were smashing the services,” she says. “Then in a blink, my income went from $60,000 a month to $2,000 — and nothing I could do in my business model would change that outcome.”

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Looking further afield for financial support

“I have banked with big banks all my life,” Holmes says. “We stayed with the same business banking for the past six years and not once did they reach out or show any interest in what we were doing. So it came time for me to start aligning with a lender who was more holistic with their approach to funding.”

It was through a recommendation that Holmes came across Fifo Capital, and their genuine interest in supporting local SMEs — unlike the big banks — is what attracted Holmes to them.

“Fifo are interested, great with communication and relationship-focused,” she says. “COVID unfortunately impacted our product roll-out and, because of that, we had to launch six products in four months — that’s a lot of money on product fill, packaging and marketing collateral. Fifo swooped in and saved us! And they did it with a relaxed and supportive nature — exactly what we needed considering the stress of this hardship.”

Strong business model hampered by supply-chain issues

While Holmes felt the full force of the pandemic on her existing business model, Linh Nguyen of Scrub Lab took advantage of a market gap that COVID opened up: finding comfortable, fashionable, antimicrobial and long-lasting scrubs. The startup was an instant hit.

“When our first order of scrubs got here, they sold out like hotcakes,” Nguyen remembers. “It was just beyond our imagination and we couldn’t keep up with demand. Even though we had the money there, it was like we were making the income but we couldn’t get the manufacturers to make the scrubs fast enough. And when they did make them, we had supply-chain problems.”

Port shutdowns and general shipping cloggage in China meant Nguyen was fielding more and more pre-orders but with no clear timeline on when the shipments would arrive. It ended up being almost five months with no stock and more than 800 presales to fill. While the scrubs did eventually arrive, that wasn’t the end of their issues.

“We were always chasing our tails in the early days, but it happened again at the end of last year,” Nguyen says. “Even though the rest of the world was up and running and everything seemed back to normal, China went back into lockdown which meant everything was delayed.

“That’s when we approached Fifo. We needed upfront money to keep things going. We weren’t turning products over and making the funds necessary to keep ordering stock because everything was delayed.”

While it was a stressful time, not least of all because Nguyen had to balance the supply-chain struggles with unhappy customers who had made pre-orders, she says the speed and quality of Fifo Capital’s services made the whole process as smooth as possible.

“The quality of customer service was number one,” Nguyen says. “But the funds were also fast to arrive and easy to access. They were very understanding — they knew what we were doing and they were happy to increase funding when we needed it.”

Why it pays to take the leap to non-traditional lending

Both Holmes and Nguyen are glad they left the big banks and chose to access lending through a non-traditional partner. For small businesses and startups especially, it’s the level of customer care you get from a place like Fifo that can make all the difference.

“I think it’s relatable to feel ignored and unsupported by the big banks,” Holmes says. “We are just a number and they won’t extend themselves for our benefit. But Fifo has been stress-free and friendly way of supporting my business through a big growth phase.”