The devastation of small business has been the greatest challenge facing Gusto, a payroll and benefits software provider, but it has also been a moment to shine, the company's CEO and CFO told CFO Dive.
The small business specialist continues to grow, but it has taken a hit to expected revenue, as its core customer absorbs the brunt of the downturn. Against this backdrop, the company has managed the crisis in a way that it hopes will help both its customers and itself emerge stronger when the economy returns to growth.
"Small businesses are in a lot of pain right now and we started the company to remove a lot of that pain," said CEO Joshua Reeves, who co-founded the company about nine years ago. Today, the company has about 100,000 businesses using its cloud-based, subscription software. "Helping them has been a big rallying cry," he said.
To help the restaurants, retail shops, small manufacturers, and others who use its platform get through the downturn, the company has been trying to take the guesswork out of applying for the Paycheck Protection Program (PPP) and other forms of federal assistance available.
"We're doing a lot of it on their behalf and letting them know, here's the program, do you want to apply to this?" said Reeves. "If yes, great. Here is an automated report you can download and use to apply."
Businesses that aren't on the platform have been accessing the company's articles and videos on the programs as well.
"We had over 80,000 businesses download our PPP report and that helps them directly apply to ... over $4 billion in loan applications," he said.
To help stay on top of the influx of calls the company has been getting since the downturn began, it has moved a number of its sales and recruiting staff to its customer support team.
"It's actually been quite inspiring to see the amount of energy that’s been brought to bear," he said. "We actually just had so much volume of activity coming from our customers, questions, things they wanted us to help them with."
The effort is showing up in the net promoter score (NPS) metric the company has been tracking since it launched. The score has gone up from the 70s to the 80s over the course of the downturn, Reeves said.
To help itself get through the downturn, the company has made a number of cuts to its office and operational costs and renegotiated agreements it has with its vendors.
"We're continuing to pay people that support us," said Mike Dinsdale, the company’s CFO. "These businesses are valuable partners in helping Gusto run our business. So, it was important for us to continue to support those folks, and make sure they all of a sudden didn't have revenue that drops to zero and weren't able to pay their people."
Dinsdale said the downturn has also given him a unique opportunity as CFO to get the company's staff and leadership to focus on core changes, like automation, that would be hard for people to focus on when business is growing but are needed for the long-term.
"We have the ear of the company in ways that we don't always have during acceleration times," he said.
Any company making these long-term changes at a time when business isn't growing can take a hit to its gross margins, but, Dinsdale said, that doesn’t have to be seen as a negative.
"If gross margin did decline ...It's bad if the business continues to operate with low gross margin; it's not bad if, because revenues are down, you take the opportunity to shore up your business model and then come out in a stronger position a year and a half from now." he said.
Dinsdale's advice to other CFOs navigating the downturn is to find ways to retool operations and offer a lifeline to their customers and partners.
"There’s opportunity that if you look at it from a slightly different lens," he said. "Companies can focus their people in a way they wouldn’t be able to in normal operating times."