I don’t want to be down about things, the truth is that no one really knows the impact of exiting the EU until it happens. But the events of the last week have got us all thinking…
“Since this recession I’m losing my baby, because the times are getting so hard”
BB King, Recession Blues
Surviving a downturn is the hot topic of the moment. There are two extreme approaches to surviving: the ‘batten down the hatches’ approach and the ‘now is the time to stand out from the rest’ approach.
Each seems to appeal to a different style of owner when there may actually be a more sensible middle path.
Batten Down the Hatches
The typical survival approach is like a doom and gloom monster feeding itself on itself: all new purchase decisions are put on hold; training, consultancy, advertising and sales budgets are frozen; all debtors are chased unreasonably; creditors are kept waiting; prices are reduced to ‘be more competitive’.
It is all a bit of a slippery slope.
Competitors, suppliers, staff and customers all smell the panic in your behaviour. The bank gets nervous; the vultures get excited.
Everyone starts asking about how long you think you might be able to survive. Someone kindly gives you the name of a friendly insolvency practitioner who can make things easier for you.
And even if you survive, your miserly approach to anything that might help you to grow the business means that you no longer have the resources or deep pockets to invest and be ready when the recession is over and the new world of opportunity finally appears.
Disaster, what disaster?
Now is the time to stand out.
A more contrary view is to see a downturn as the time to stand out from the rest by investing in your people, new products, business promotion and generally shouting from the rooftops that you’ve never had it so good.
By implication you are saying that you are better/safer/more reliable/successful than your competitors who are clearly struggling. This high risk strategy will get you talked about but the real concern may be about your stamina to survive the prospect of literally haemorrhaging cash should your cunning plan not pay off.
The truth probably lies somewhere in the middle.
Don’t talk your business into receivership (reducing prices may well be the first nail in your coffin) but don’t be stupid (spending money unnecessarily).
A systematic, structured approach to your business should get you through the bloody battlefield ahead. The first thing you need to do is assess your current business performance. Realistically look at your current activities and make some sense of what is going on.
There is no shortage of profit improvement hacks (see this one) to survive e.g. in reality, there are some tough questions you need to ask yourself. You need to answer the questions honestly and take massive action. That is the only way to make sure that you don’t become another statistic.
Do not wallow in the mess of trying to make sense of it all but make some clear decisions based on some simple criteria. Do not get over-emotional and do not get over-complicated.
All you are trying to do is run a business, i.e. buy/make stuff that people want at one price and sell it for another and make a profit in the meantime. How difficult can it be?
So ask yourself the following tough questions:
(For each question there should be an action point answering the question.)
Actions can be generated by asking:
What are we going to do about it?
What are we going to stop doing? Or start doing… continue doing… do more of… do less of…?
Some Crunch Questions
Where do you make the money?
Where are the Quick Wins?
What are the Long Shots?
What are your Top Five Products/Services? How can you sell more of them?
How can you get better prices?
What are the current ‘opportunities’?
If you could only focus on three of them then what would they be?
Where are you currently wasting time and money?
Which suppliers/customers/staff/products are unprofitable?
Which ones should you fire?
When will you do it?
And if the poo is about to hit the fan…
When you are eight weeks away from bankruptcy then it may well be too late. You owe too much and can’t see a way back, you are under-resourced and you are under-delivering and it feels like you’ve run out of time. You are probably being dishonest with suppliers, customers, staff, the bank, yourself and your husband/wife/partner.
The only answer seems to be to borrow more money.
The reality is that you may be clutching at straws.
So, at least be honest with yourself and your partner.
Be warned, most bankrupt people live on their own; their partner and children have long since gone because they can’t cope with the deceit and lies (or delusion and illusions).
There is no shame in bankruptcy.
In fact it may be better to go bust now than to try and keep the business limping on for another few months.
The relief is immense – you hand over all your debts and your assets to someone else to manage. No more bailiffs or irate customers or staff. No more debts. It ceases to be your problem. And you can go and get a no-brainer job like stacking shelves in a supermarket and you will receive all that you earn (after tax etc.)
No more worries at night – you can spend time with the kids or do all things you’ve not got round to for years: paint the spare room, walk the dog, visit your mum; yup sounds pretty good to me.
Of course we are back to the old ‘survivorship bias’ – we don’t hear much from the ‘failures’ and when we do they deliver a message that has been skewed by their justification of what happened.
Now is the time to step back and review the business (performance to date, the potential to grow) and put together a simple plan (one page maximum) to get you onwards and upwards. Stop procrastinating. Decide what you are going to do and do it, but do it properly. Stop playing around the edges… be decisive and take action.