Riders on the economic storm: Practical thinking for small business Riders on the economic storm: Practical thinking for small business

24/06/09 11:58

Being an entrepreneur in challenging economic times can be a bit like being the dude with the arc waiting for the big rain. You know that if you can just manage to keep your business buoyant a bit longer, you stand an excellent chance of riding the recovery wave.

There’s been a lot of thought and commentary on this topic of late across the US, and as a small business owner, over the past several weeks I’ve been bombarded with suggestions from marketers, banks, and service providers with “tips for finishing the year strong” and “preparing now to take advantage of the turnaround.” The one I enjoyed most was from a bank that was a thinly disguised ad for their on-line business banking tools, advised first and foremost “keeping it real.” Unlike the folks with access to bailout funds, I imagine the rest of us have been “keeping it real” for quite some time now. Still, it got me thinking. What’s really the best advice for small businesses right now to ride this economic storm well enough to be ready to take advantage of the downturn?

Chances are that by now the early advice to trim fat and reduce expenses has already been headed and it’s been months of doing more with less already. As my old favorite boss used to say, the first line of defense in any period of belt-tightening period is to “stop spending money as if we had any.” If you haven’t already gone the cost-cutting route, that’s obviously the first line of defense.

But it can’t be the only one. Fact is, you can’t just cut your way toward growth and there will be a limit to surviving if you can’t manage to take a step toward investing at the same time as saving. So … after sifting through too many top 10 lists in my quest for better ideas than “keeping it real” and “staying positive” (which incidentally, inexplicably, is the most popular recommendation on the web), a few “sanity check” talks with some long-term survivors, and a compilation of my own lessons learned, here are five practical suggestions:

All of this is great recession advice for entrepreneurs. If adaptation, improvisation and compromise are not part of your modus operandi right now you’ll need to cultivate these skills tout suite. In his October 23, 2008 Businessweek article, “Surviving the Storm: Recession Survival Guide,” Peter Coy quotes similar advice: “Since no one knows what will happen next, it pays to be adaptable, says Michael J. Swanson, an economist at Wells Fargo (WFC) Economics. He wrote recently: ‘Having the right attitude and fortitude trumps any forecast or plan.’ That's as good a strategy as any.” (More from this article at: http://www.businessweek.com/magazine/content/08_44/b4106048092128.htm)

2. Know your market and maintain your focus. What’s really selling in your market right now? Yes, business has slowed dramatically, but with few exceptions, it has not come to a grinding halt. Who is making money in your sector and what are they doing differently? Guessing at the answers does no good. You need to get out there and talk to your customer base, attend industry events, and be present to know what’s going on and be ready to take advantage.

The folks writing at www.survivingarecession.com offer this advice in their blog article, “Surviving a Recession and Prospering”: “To take advantage and prosper during a recession you have to be aware of the financial opportunities when they are available … Surviving the recession must be your primary focus never loose track of that.” You can’t be aware of the opportunities if you are not on top of your market. (More at www.survivingrecession.com, which contains a number of good practical solutions, there more than a few clinkers like, “Surviving the Recession by Staying Employed.”)

Beyond knowing the market, know yourself. What trades and sacrifices are you willing to make in the short- or long-term? What’s aren’t you willing to do without in your life or your work? A recession challenges all entrepreneurs to consider their limits. If you know what is most important for the longer-term goals of your business and you continually are reevaluating your work in those terms, that will help you make the tough calls when you need to (like layoffs) and keep you focused on a vision that inspires you to get past the survival stage.

3. Watch out for self-bargaining and resigning yourself to fate. This is a sobering story. I met an entrepreneur recently who was working very hard to keep his business afloat but bleeding money at an alarming rate. He was throwing cash and time at every business development channel known to man, from cable advertising to direct mail to speaking gigs to web development to networking to discounting. He was even scheduling meetings with his local congressman to advocate for his industry. But all of this was costing him money and yielding very little in the way of return. He told me he was one contract away from surviving or declaring bankruptcy and he had actually given himself 30 days to put it to fate and see how it turned out. When you reach the point of “if/than” bargaining — if I get a new contract, if this prospect calls me back, if the warm weather would just arrive — you’re looking at the first lead indicator that if you haven’t hoisted the white flag yet, you’re getting it ready.

Jonathan Weber writes in Slate’s The Big Money: Making Payroll feature in a piece titled, “Know When to Fold”: “Failure is not something an entrepreneur can give in to very readily. A certain level of blind optimism—even in the face of long odds—is often necessary to build a successful product or company. If you, as the business owner, don't believe, you can be pretty sure your employees, customers, and shareholders won't, either… don't give in easily if you feel the passion… Sometimes you have to take the view that failure simply isn't an option.” A business is like most living things — it needs constant attention to grow and thrive. If you don’t “feel the passion,” as Weber puts it, or your fears of failure or financial difficulty overshadow it, it might already be time to move on.

4. Express your value in everything you do. Many would-be entrepreneurs find it daunting to constantly “sell” their businesses, especially in tough times when they know their clients might not be as receptive to the pitch. Instead of simply productizing what you have to sell, understand the value you deliver, particularly to customers in tough times. If you work on constantly expressing that value through everything you do, you can influence with authenticity.

Baltimore Business Journals specifically advocates self-promotion as number three on its top ten list of “to dos” for surviving a recession (published January 5, 2009 and available at: http://baltimore.bizjournals.com/baltimore/stories/2009/06/08/smallb1.html): “No one is going to toot your horn, particularly in a recession …” So you will need to find creative ways to do it yourself. As entrepreneur Jay Golz writes for CNNMoney.com (http://money.cnn.com/2009/02/09/smallbusiness/surviving_recession.fsb/index.htm): “Don't be tempted to gut your advertising. Companies that continue to advertise come out ahead after a recession, according to studies by McGraw-Hill Research. And that makes sense: If your competitors are in retreat, you can build your market presence.” In this regard, it’s important that you don’t stop marketing, but that you market smarter and focus on value-driven messages rather than throw money everywhere (see the story about the entrepreneur in #3).

5. Get out of the office to cultivate your network … constantly. We’ve all received the spam mails about building a business in 7 days without ever leaving your desktop. For most of us, it just doesn’t work that way. And, social networking sites like Facebook, Twitter and Linked In are great tools in your network arsenal, but you also need to include elements of “getting out” to interact with others to build most businesses.

In April, Sarah Payton of the Orlando Small Business Examiner wrote: “There are people out there doing business right now, believe it or not. But you won't find them if you stay holed up in your office. Go to networking meetings and meet new potential business.” It’s good advice you’ll find echoed by other business brethren as well. It reminds me of the Wayne Gretsky quote: “You miss 100% of the shots you never take.” It’s tempting to sit in the office and wait for the phone to ring, but you need to get out on your proverbial ice and do your part if you really want that goal.

Lastly, it didn’t make this list because it is a bit too much like “think positive,” but I’m encouraging all of my small business clients to suspend disbelief and stop defeating themselves. There’s a sign at my son’s school that reads, “If you believe you can or can’t do something, you’re right. So what’s it going to be?” While just believing you can do something is no guarantee, it’s a near-certainty that believing you CAN’T is pretty counter-productive. As trite as it sounds, there is power in positive thinking, and it’s even better when you add a little productive action to go with it.

* * *

— Crystal Schaffer