If you run a small business nothing is more certain than you will encounter storms. Sadly, too many business owners are caught off guard by them.
The surprise is compounded by the absence of a robust infrastructure to support their business. The result is, at best, an unnecessarily bumpy ride and at worst, a total disaster.
Storms come in all shapes and sizes, some are obvious, predictable and you can see the warning signs far ahead. Others are quite a surprise. I am sure if you had surveyed small businesses owners at the end of 2019, a very tiny fraction of a percentage would have predicted a global pandemic would sweep the world and impact Australia in less than 3 months time.
Let’s have a look at a few of the more pedestrian varieties of storms.
Which of these Storm Types are you most vulnerable to?
- A major client who is responsible for 60% of your income goes into liquidation owing you a substantial amount of money.
- The supplier of a critical component for your product is not able to fill your order because of their own supply chain issues
- A key member of staff leaves
- A key member of staff leaves and takes clients with them!
- Your business partner is declared insolvent
- You double in size overnight – that can feel a bit like trying to crest a tidal wave before it breaks – equal parts exhilarating and terrifying
One of my favourite movies is Martian starring Matt Damon. At the end of the movie he addresses the incoming class at the space academy and I would like to paraphrase his quote to show how it is equally applicable to business.
“Did I think I was going to face storms? Yes absolutely. And that’s what you need to know going in. This is business and at some point in time everything is going to go south on you and you’re going to say this is it, this is how I am going to end and you can either accept that or you can get to work. That’s all it is you just begin you do the math and you solve one problem and then the next and if you solve enough problems you get to stay in business.”
Italics are mine.
You see, in my many decades of helping small businesses weather storms the very simple fact I have discovered is that once you hit the storm there is rarely one thing that will help you get through it.
You may think that the solution is to reverse the cause of the problem. So the only way to “fix” losing a major client is to get a new one. And that may be true but in the short term it could mean cutting back on expenses, borrowing money, picking up a number of smaller clients or introducing new products or services.
Here are 8 things you can consider that will keep your business boat afloat when you hit a storm.
- Put your life jacket on – there is no point in killing yourself to save your business. It is a stressful time and you need to make sure you are doing what you need to so you remain healthy and alert.
- Batten down the hatches – Make sure you other clients are happy, look at where you can cut down on expenditure or extend payment terms with suppliers
- Take a cold hard look at where you are at – Make a realistic assessment of where you are at and what needs to be done to survive – can you do it?
- Find a lighthouse – keep your eye on the horizon – perspective is so important during tough times. Find someone who can be your lighthouse and help steer you to safety. That might be a mentor, a friend, a coach or mastermind group.
- Plug the holes – stop spending where you can, do you have surplus staff, look for areas of your business that are leaking money and plug them up. When you are in trouble, cash is king.
- Keep Bailing – can you get money in early from customers, can you change your payment terms to get some money up front. Can you get grants or assistance from the government or a temporary reprieve from a landlord or bank
- Raise your sail and adjust your course – is there a way you can take advantage of the current circumstances. Are there any characteristics of the current storm that might give rise to new opportunities? Is this a time to pivot your business?
- Build a stronger boat – once things settle down you need to take a look at your business structure and how you run your business to make sure you are ready for the next storm. Not only ready but in a much better place to survive it.