How does this crisis compare to others, and how should small business owners approach this black swan differently?
Business Black Swans are rare, unpredictable events that have a severe impact on a business. They may be rare when considered individually, but when they happen in groups they are very frequent. Throughout our 25 years in business, we have helped businesses through every kind of crisis imaginable. We make sure our clients are prepared for any major event that is impossible to predict. When a business black swan event does arrive, the company survives and thrives.
Our Black Swan preparation and survival work has helped:
- Owners plan and accomplish the right next steps under rapidly changing conditions
- Ensure every client has enough revenue, profit, and growth for future success
- Partners and husband/wife teams productively work through their differences
- Owners see and predict the impact they are having using plans, dashboards, and KPIs
- Document and implement short action recovery and long-term growth plans
- Increase stability and profits through process development and employee assessments
- Upgrade advisory teams and exit unproductive partners
- Build strong teams who can take charge to implement the owners’ vision
- Owners monetize their sweat equity through insider and outsider sales
- Secure long-term income for a senior generation ready to retire
- Ensure that next-generation family members learn the skills they need to take over
- Grow businesses depth, size, and survivability through smart acquisitions
Specific client examples of successful Black Swan preparation include:
- Achitecture firm doubled in size twice. Organized 6 partners, transitioned 2 out, added 2 more from rank & file. Expanded geographic reach and significantly greater profits
- The engineering firm transitioned from Gen 1 to Gen 2 and prepared for Gen 3 to take over. The transition ensured everyone was well paid for their efforts and the business didn’t struggle
- An eCommerce company planned its way to pay off debts and build reserves
- Construction company organized multi-tasking staff into functions. They then could focus, support growth plans, and be held accountable for specific results
- A retailer survived and thrived by expanding and promoting its ability to manufacture
- B2C landscaping business thrived during economic meltdown through smart acquisitions
- Transportation company navigated a complicated, emotional transition from Dad and Mom to Daughter. Everyone arrived at sale day ready and willing to celebrate
Also:
- Non-profit Executive Director organized employees and Directors to build revenue streams that made the company self-sustaining
- Energy company merged with a major industry player providing owner stability, and continuation of employees jobs
- Commodity distribution company built and implemented a rapid direction-shifting plan
- Second-generation owner of an industrial manufacturer put people and programs in place. Results increased stability, improved profitability, and expanded market reaches
- Service company recovered from bad advice, and advisors who took advantage
- Audio-visual company taught their employees how to be accountable and put customers first. This led to doubling revenue and getting the monkey off the owner’s back
- a real estate developer evaluated how best to manage their portfolio. At the same time, their construction arm fought the blazes beneath the World Trade Center
- a real estate business characterized the right buyer and navigated tough family and external negotiations. They then aligned with a deeper-pocketed firm while preserving jobs and taking chips off the table
Crises of the Past
In the early 2000s, the nation struggled to deal with a falling dollar. Also the Middle East conflict, speculation over and competition for oil, an all-time high for oil prices. Company owners asked for help re-defining business models, adding revenue sources, and navigating partnership conflicts. Expanding their business portfolio to ensure profitability too. We got them what they needed.
The sub-prime crisis and related construction industry meltdown of 2008 were devastating. Major and minor players closed up shop. We helped owners of construction and construction-related companies make it through those tough times. These companies continued to grow and expand through not one but two 10-year cycles. Those companies’ combined contribution today to our economy is hundreds, perhaps thousands, of jobs. They are able to provide people with livable wages, meaningful work, good benefits, and continued growth opportunities.
In 2012, on the East Coast, a 100-year hurricane named Sandy turned out the lights and brought work to a standstill for many. The impact of that storm lasted for more than a year. During that period we worked closely with companies who needed and got SBA assistance. Some wanted help weathering credit line reviews by their banks. And others who had to figure out how to piece together a working plan for short-term survival and long-term growth and opportunity.
Starting in 2016, it was a tossup that global crisis might be more challenging: China fundamentals, OPEC, Brexit, trade uncertainty. Companies selling B2B and B2C, alike, felt the challenges. Good customers and vendors fell by the wayside and profits turned to losses. Business owners looked to us for help understanding their financial future and defining optimum future paths for their businesses. Navigating sales and acquisitions, building accountable workforces, and improving processes on the factory floor were also on the table.
Current Black Swan: the COVID Crisis and its effect on small businesses
In 2012, a hurricane called Sandy hit the East Coast. It was a really bad storm and it caused a lot of damage. The storm lasted for more than a year. During that time, we worked closely with companies who needed help. Some companies needed help dealing with their banks, and others needed help coming up with a plan for the future.
In 2016, there were a lot of things going on that made it hard to predict what would happen next. There were problems in China, OPEC was unstable, Brexit was happening, and there was a lot of uncertainty about trade.
But it is not all black swan news is bad. As some businesses fall away, that can turn into an opportunity for those who stick it out. The spike in unemployment can be good for business owners looking to find quality talent to help them grow. Small business owners are known for being nimble, flexible, and resourceful. Many of them are finding new opportunities to solve problems that didn’t exist, or that weren’t priorities before.
How do small businesses weather the future given all the uncertainty?
The single biggest determinant of success is the commitment, ambition, and drive of the business owner. If you are feeling worn out, take time off to recharge. Keep your eyes focused down the road and what’s ahead. Don’t waste too much energy and sweat trying to control what’s happening right in front of your day today.
Put together a bankable plan that justifies the increased investment. Include guidance on how best to use the funding to recover, expand and weather future challenges. Talk to your banker, the SBA, reputable SBA lending consultants, and private investors.
You need to play smartly with the cards you have. You should rebuild your business after a black swan. This means protecting your cash flow. Find new suppliers who can do better than the ones who are struggling. Also, rethink your business model and evaluate how viable your customers are. Look for new markets to add size and profits to your business so you can increase your reserves. Implement processes to cut out waste. Transition more customers to internet communication and eCommerce buying solutions. Determine what size business will be right for you in the future and make a plan to get there.
Pay attention to your employees. As scared as you may be as an owner, many of your employees are even more frightened. After all, you have the resources of your company to use to build solutions. Employees who live paycheck to paycheck may be running out of options. They may be wondering how long they can hold on. Or how long you’ll be able to let them hold onto their much-needed jobs.
Looking for suggestions on how best to proceed forward? Call Strategy Leaders to help you determine the best path for your business, to navigate the challenges you’re facing.
