Firoz Lalji at Zones Inc
“Firoz Lalji was born in Uganda and came to the UK to study at the London School of Economics and Political Science (LSE)”. He came to Seattle and built Zones in 1986, now a $2 billion global IT solutions provider committed to helping businesses complete their digital transformation. With experience during previous recessions, Firoz focuses on his people, his customers, and his financials. He also uses this time as an opportunity to restructure and transform his business. Founded in 1986, Firoz has experienced not one, but three economic recessions. Though this IT services company, offering hardware, software, and IT services, is a much larger business, Firoz mentioned that the formula for surviving an economic recession is the same as it was back when his company was much smaller. According to Firoz, in every hardship, a business owner must focus on his employees, customers, suppliers, the company’s financial metrics, and lastly, use it as an opportunity to restructure & transform the business.
From a leadership standpoint, the business owner must show resolve. The messaging is not to hunker down but to come up stronger while being transparent and openly communicate the plan of action. Firoz also mentioned how he was very aggressive with new customer acquisition and focused on making his existing customer base happy.
In terms of financials, Firoz stressed how important cash flow was to his business. He took his budget and did a cash flow analysis, which helped him identify if his business will still be solvent given the worst-case scenario and demand drops. If the answer was no, he looked at all the areas he could cut costs until the number showed solvency. Next, the goal was to collect receivables and stretch your payables as much as possible. In terms of collecting receivables, make sure to clean up old balances before shipping new products. Consider offering prepayment options to customers in exchange for locking in the product–with the current supply chain issues due to COVID, this can be a value add to customers. Credit cards and leasing options for the customers is another method to preserve cash flow. Firoz found that larger clients are generally more understanding and willing to prepay or make a deposit. When dealing with smaller clients, be very careful and cognizant of their situation. These businesses are most vulnerable during this time, and opening up the conversation by being empathetic and offering ways to help them can help foster a better client relationship. For stretching your payables, fortunately, as an older company, given their great relationship, their suppliers have been very accommodating. But Firoz mentioned, for smaller businesses, consider leasing programs with manufacturers as a financing option or ask if they have the ability to drop ship equipment. Lastly, making sure not to carry a lot of inventory, and if you do, make sure they are necessary and for the customers.
Firoz also stressed this is a good opportunity to make business processes more efficient and have greater scrutiny of cost. Transform your business, by focusing on online and virtual sales to find new revenue streams and be creative when looking for new opportunities. In terms of COVID, Firoz is focusing on moving into virtual sales, by offering online courses, and online sales. Digital transformation is often hard to implement, but this situation has forced his employees to adopt new practices more quickly.
Although COVID-19 differs from previous recessions with increased fear and risk in health and safety, in addition to increased supply chain issues due to closed sectors of the economy, he is approaching this pandemic with a similar perspective. Overall, his message to small businesses is to continue to stay optimistic, focus on people, and come out of this situation stronger than ever.