Corona virus will be more lethal for startups than bushfires

The Australian government’s business rescue packages, while welcome, have overlooked the future: thousands of small and successful startups. Startups in many other less fortunate countries may struggle to survive.

Our company, Close Comfort (www.closecomfort.com), a small family-owned business, cannot demonstrate a 30% year on year loss of business to be eligible for assistance because we have invested to grow our sales. Now we face a similar financial catastrophe like tourism and hospitality businesses as our sales and sources of investment capital dry up simultaneously.

It has taken us 13 years to perfect our sustainable, energy-efficient air conditioning technology. Along the way we benefited from government investment in the form of grants and incentives. Until now, our sales were steadily growing as more and more people learn to think differently about air conditioning. We are just beginning to export our technology to vast markets across South and South East Asia, and we have hundreds of satisfied Australian customers too.

Now our small team of highly skilled and creative people face salary cuts, stand-downs or unemployment just because they were courageous enough to join a start-up.

I have spoken with directors of other companies in the same situation: they feel penalised for being successful. As things stand, they are being penalised compared with traditional low-growth industries.

Government assistance could help companies like us survive to enrich and diversify our economy with a more sustainable future.

Otherwise, the case fatality rate among our youngest and most successful, innovative companies could far exceed the human toll.

The stimulus eligibility requirement for small and medium size businesses should include all sources of income and cash flow necessary to keep the company going, including both sales turnover and capital contributions from investors.

Eligibility should depend on the company demonstrating a 30% or greater loss of income from all relevant sources, relative to reasonable expectations.

The stimulus package legislation is being drafted as I write so, if you are in Australia, please email your local politicians and tell them about companies like ours who want to keep our talented staff in whom we have invested so much.

The virus may be more lethal for the elderly, but the economic catastrophe will be far more lethal for young companies which will provide for our future. It is not just us. There are thousands of small enterprises that will struggle to survive, in every country around the world.

Governments need to nurture courageous innovators and the enterprising people who work with them instead of denying them the oxygen they need to survive this economic firestorm.

Sign this petition: https://bit.ly/343OIS4

Challenges for Pakistan Engineers

A Pakistan university Vice Chancellor told me how, when he first took up his position, he challenged his engineering faculty.

“Listen, he said, you and other engineering schools in Pakistan have graduated tens of thousands of electrical engineers, yet, the more you graduate, the worse electricity load shedding becomes.”

“Sir, they replied, that is a political problem, it’s nothing to do with engineering! The politicians have accumulated a huge circular debt, which is not real debt, just an accounting aberration to cover the fact that rich people don’t pay for electricity.”

The Vice Chancellor smiled. “Please remember, he said, electricity and water utilities are staffed and run by engineers. Furthermore, the debt is real debt: Pakistan State Oil now has to pay cash in advance of delivery because it ran up too much unpaid debt with suppliers. As long as people can use electricity without paying enough to cover the cost of fuel to run generators and maintaining and extending all the transformers and cables, the problem will get worse. So whether you like it or not, as far as Pakistan is concerned, it is an engineering problem. That means it’s your problem too!”

Pakistan’s politicians and business community have a low opinion of Pakistan engineers: it is not just load shedding and poor water service quality. Pakistan is a high cost operating environment, and Pakistan engineers (with a few notable exceptions) have a poor record for delivering on promises: on-time, with good quality, high safety standards, and within financial constraints. In short, Pakistan is an unattractive destination for capital investment because engineers (among others) don’t deliver what they promise.

That’s the bad news.

There’s good news, too….. well sort of. Continue reading