Every business will experience its fair share of ups and downs, which means every business owner will at one point or another have to steer their business through some hard times. Although you may not be able to completely shield your business from a crisis, it’s important that every business owner has in their arsenal, strategies to minimise the impact of a downturn.
Paul Leonard is an entrepreneur, executive director and certified financial planner at Consolidated Financial Planning, an authorised financial planning firm. Leonard is involved in Consolidated’s Corporate Solutions. Here is a look at his strategies for surviving a crisis in your business:
1. Face the problem
Admit that there is a serious problem and address it as the number one priority. At the time my business was still relatively young. When it got into trouble it was like a child that had become very ill. That child needed all of my attention. There was a significant (temporary) decline in my quality of life as I dropped almost all activities that did not relate to trying and nurse this sick child back to health.
“Setbacks are wonderfully rich in learning opportunities”
2. Don’t compromise on quality
Keep all essential services to clients up and running. Providing service to clients is not the same thing as managing a business. Do everything possible to ensure that your service to clients does not decline. We had a small client base and a steady trickle of referrals. If we dropped our service then we would be set back even further if it meant that our small client base also shrank.
3. Put your pride in your pocket
“Hubris” the arrogant type of pride, has caused many businesses to fail. When the sick child needs attention, there is no space for your ego if you want this scenario to have a good chance of a positive outcome. Admit that there is a problem, and deal with it. If you don’t, your pride will suffer a far worse fate when the business ultimately fails.
4. Cut out non-essentials
Cut out anything that does not relate to critical essentials. Non-essentials drain resources both cash and effort/focus resources. Be real about whether it is a need or a want.
5. Hang on to essentials
Don’t get too enthusiastic when cutting back. Don’t cut back on tools or resources that are essential for the business to function and provide good service to clients.
See Also: The Best Ways to Avert a Business Crisis
6. Find out what went wrong
Setbacks are wonderfully rich in learning opportunities. Once the boat has stopped rocking wildly, spend time reflecting on what went wrong and what should have been in place to have prevented that. Then make sure you intentionally put that in place as you rebuild the business.
7. Be encouraged – you’re in good company
Few successful business owners have not had at least one serious setback (many have had numerous setbacks) in their business careers. Success means getting up one more time when you fall.
8. Choose to control the things that make a difference
What can you influence? Some things you can’t control but you can influence. For example, if there is something you can say to someone that might influence their thinking in a way that would positively impact the outcome, then have that conversation. Don’t keep quiet and complain that there is nothing you can do, you have control over whether or not you will start the conversation.
What can’t you control or influence that still affects you? You can’t control the weather but it affects you. You may not be able to control legislation that influences the environment your business operates in. You may not be able to influence the market that your business operates in but it affects you. While you cannot control the weather you can control your sails.
9. Administration and systems
Put proper accounting and administrative systems in place. Even if the business is small cash flow management is essential. The money spent on a good bookkeeper or accountant to get proper control of the finances cannot be underestimated.
Cash flow to a business is like oxygen to a human, you can’t survive without it. Manage your cash flow as if your life depended on it (because it does). There is a well-known saying amongst business people: “Turnover is vanity, profit is sanity, cash is reality”
10. Staff
Hire the right people and have proper employment contracts in place. Also, look for great partners to accelerate your plans. In many industries, some organisations can provide small businesses with support and resources, while the business remains independent.
Lean on your local business chamber. Many chambers have mentorship programmes. Retired captains of industry, who are in the “give-back” phase of their lives, are available to coach and advise entrepreneurs at very reasonable rates.
