Survival Mentality
I“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” Charles Darwin
I’ve personally owned or managed businesses that have experienced business interruptions/decline due to windstorms, earthquakes, lightning strikes, cars driving into our storefront, the SARS outbreak, the terrorist attacks of 2001, and the COVID pandemic.
I wish I could say that I handled all of these challenges with grace and wisdom. I didn’t. There was anger, anxiety and overreaction. Fortunately, in all cases, my businesses survived in spite of some poor decisions on my part. In hindsight, it took a combination of luck, strong mentorship from others and significant adaptation in our operations to get through those challenging times. I learned quite a few lessons along the way and am sharing a few:
Revisit your budget process. If you don’t have a budget process, you need to create one, ASAP. Businesses run on resources. You need to know what resources are necessary to keep your business afloat. Your greatest adaptation you can make is to look at what resources you need to keep your business afloat during the challenging times. It’s critical to chart differences in operational issues (where sales/expenses will change) and cash flow issues (receivables/payables/inventory). Looking at what payments are critical and what can be deferred is a proactive exercise and best done with at least one external mentor for support (friend, family member, accountant, bookkeeper, trusted advisor). Often someone slightly outside of day to day operations can help you prioritize necessity of expenses with the emotional detachment that the business operator will never have.
Focus on customer maintenance and new customer development. In any economic challenge, it is important to remember that no disaster in US history has completely stopped business activity. Think of Maslow’s Hierarchy of Needs. People need food, shelter, healthcare and safety. The transfer of funds for these things has not stopped completely and there may be remote opportunities for your business. Yes, things have changed, but so will our ability to adapt and keep our businesses relevant. Even if there are no immediate opportunities, preparing sales strategies for resumption of operations can make recovery quicker. If you can’t take care of your customers immediately, you want to have a plan in place to get them back once operations resume.
Look for financial resources. I like the saying, “this too shall pass.” We may not be able to predict the length of business slowdown/shutdown, but we can certainly plan contingencies to keep the business afloat. Experience has shown that those who have access to financial resources are better positioned to weather challenges until the marketplace stabilizes. Probably the biggest lesson learned in hindsight is that financial resources should be sought prior and negotiated as a contingency, not a reaction. If possible, you want low interest, long term financing to spread this short term hurt over a longer period. Of course, there is risk involved in any new investment of resources, so there needs to be some level of confidence that your business is positioned to recover before making a decision. There are plenty of financing options out there, but use diligence in assessing options. Always use caution to assess the cost of short-term financing before entering into any agreements. I’ve unfortunately watched clients get into onerous terms for the benefit of quick cash. I especially caution businesses to steer clear of merchant service loans. They often have high associated fees and relatively short payback schedules that can hinder recovery efforts.
Ultimately, survival requires being nimble and thoughtful towards what you need to prioritize with resources to get through challenging times. Learn to establish your priorities when times are good to prepare for interruptions. While it may be impossible to anticipate every “what if” scenario a business may face, those who have contingencies planned will undoubtedly be more nimble and adaptable to face business challenges.
