My main “Pearl of Wisdom” is to remind business leaders to Be Courageous; don’t let the fear overwhelm you.
During the 2008/2009 downturn, there were several things we did to overcome the challenges and adversity at that time. I am calmer now because of what we did years ago, and I remember how we became a much stronger and thriving company due to the initiatives we implemented which became standard strategies going forward and propelled our growth.
Today, I am helping other business owners with a few key concepts that I would like to share:
1. Get back to the CORE of what you bring to the market and pivot where possible.
It is easy to become so engrossed with the negative impact that our business is or could be facing that we can’t think of ways to pivot or expand our products or services. Introducing innovation in the way your company is organized and in the services you provide can lay the groundwork for staying power and growth.
To start the process, think of your strongest core value and engage your employees in the process to come up with new ideas. Here are some questions to think about:
- How can you be of greater service or benefit to your clients? How can you help them more?
- What is the value you provided prior to the slowdown? Can you expand it virtually?
- What are your clients doing during this time? What is their greatest pain point?
- Do you have existing relationships, products or services that you can proactively pursue to provide a greater benefit to your clients?
2. Know your numbers.
No matter what stage or success you have seen so far, there is always more to learn to become better. I love the saying ‘you don’t know what you don’t know” and my biggest recommendation is to get support from experts or advisors to help you get through the unknown.
It’s critical to dig deep into your financials to know what your true break-even is in order to be profitable. Some financial concepts that might seem commonplace can really make a huge difference between making it through a rough patch or not.
- What is the monthly number you need to cover your minimum expenses?
- What expenses can you cut that will not be detrimental to the business?
- What is your pricing strategy for the short term and long term?
- What is your true gross margin? How can you improve it?
Develop a worst-case financial scenario and develop a plan to overcome it.
3. Value your employees. Build your dream team.
It takes courage to protect your essential key employees. This is perhaps one of the most emotionally challenging situations an entrepreneur must deal with, but you must make the tough decisions for the greater good of the company. Knowing the value of your employees, being unafraid to surround yourself with great people, and allowing them to be the best they can be, is key. Now is an excellent time to find top people that could help raise the level of your team if there are any key employee gaps.
- Rate you employees by knowledge, service and contribution.
- Expand job functions where it makes sense; you will be surprised how good employees step up when asked.
- Seek input from key employees to help you pivot, allowing them to be part of the process.
- Trust and delegate routine tasks so you can work on the new strategies for your business rather than working on the business – there is a big difference between the two.
- Remember there is no ‘i’ in company; it takes great people to make a great company.
Every entrepreneur is looking at the expenses they can cut and are most likely in the process of cutting to the bone. Now comes the hard part: examining the employees you have. In the spring of 2009, I had to let go of several employees in order to protect the remaining employees that were key to the organization. Not wanting to let go of any additional employees, I then asked all remaining employees to take a small pay cut for the year and stopped matching our 401K employer contribution.
During this time, I also put together a deferred comp plan for our top key employees. This new program was not only a retention tool but also demonstrated a strong commitment to my key employees.
As a specialty chemical distributor, we represented numerous suppliers and our sales cycle was very long, approximately 18 months to 3 years. Even though existing sales were down, we had a lot of ongoing projects that were still being worked on by our clients. It was important for our suppliers to know the work we were doing to grow the business. We instituted a project documentation process that communicated the activities we had with our clients for our suppliers. Sharing this information gave our suppliers knowledge that we were working hard to overcome the downturn and pursuing sales.
By utilizing the experience of my key employees, they helped provide critical strategic direction for the company that lasted for many years to come.
Due to re-inventing ourselves during the downturn and putting new strategies in place, we were able to hold on and saw glimmers of growth and hope. By the fall of 2009, I felt so comfortable with the direction of the company that I re-instated everyone’s salary, and the following year, I paid back what they gave up as a bonus in order to show my gratitude for the hard work we all did to overcome the downturn. We eventually surpassed any growth we had prior to the downturn due to the strategies we put in place during that time.
My hope is for you to think about ways you can be courageous and that these examples will spark innovation in your business so you can not only hold on but get through today’s crisis with grace.