RIDING OUT THE STORM

If you are a small business owner, I don’t need to tell you that managing your business is extremely challenging, even under the best circumstances. The Small Business Association has failure rate statistics that range from a 20% failure rate in the first year to a 50% failure rate by the fifth year. By the 10th year, that percentage jumps to a staggering 70% failure rate. It almost makes the thought of starting a new business seem like the last thing you want to do. The odds are not in your favor.

Have you ever seen those videos where some very talented and coordinated individuals spin plates on the top of long narrow sticks? As a business owner, you become your own expert at keeping multiple things functioning all at the same time just like a plate spinner. They include but are not limited to income, expenses, hiring, payroll, sales, marketing, etc. With all of these responsibilities, it is no wonder so many businesses fail.

If managing a profitable business during good times is rough, what about the added impacts of uncontrollable outside economic pressures? While what we are experiencing with the Coronavirus (COVID-19) pandemic is unique to us, the idea that something could have such a far-reaching economic impact on the country is not new. This country has survived other times of economic depression and recession.

In recent history, we can recall the economic downturn during the housing crisis that started around 2007 and lasted until about 2010. The effects of that time period took years to recover from. In some areas of the housing market, we have only just recently been able to see that recovery in full.

As the owner of a real estate appraisal firm, I can tell you that there were countless appraisers who were unable to survive that time period due to the severe impact it had on real estate professions as a whole. There are also stories of appraisers who not only survived that time period, but thrived.

So how do businesses survive such drastic negative environments? The answer is as multi-faceted as the number of “plates” we need to keep spinning in order to stay successful. But I will only focus on a few that I feel are foundational to maintaining success.

1. Be creative and adaptive.

Find ways to accomplish what you have always accomplished in a new way. The latest example is that of restaurants. They do not have customers inside their buildings, but the ones who are surviving have created ways to stay compliant with social distancing restrictions and still bring in an income.

The diner down the street from my office had curb side service for a number of days immediately following the order to restrict service by state mandate. They have been a community landmark for 3 generations. Unfortunately, the “old” way of doing things was not sustainable and they had to close, laying off their entire staff. The owners decided they had to think outside the box and realized that they couldn’t stay closed. Rather than despair, they created a unique limited menu, instituted the ability to order online, and they are still going to deliver to their customers curbside. It might not be a packed house like they are used to, but they are being extremely flexible and creative. They figured a way to keep their costs and labor efficient, meet the needs of their customers and remain viable all at the same time.

2. Think positive

We get it- this sucks. There are thousands of business owners who have had to either completely close down or reduce the operations of their business to a near halt. In my appraisal business, there has been a sharp decline in the number of orders we have been receiving. I might be “the cup is half full” type of person by nature, but there is something to be said for trying to find the positive in any situation.

For many, we have extra time to accomplish things that we never had before. How many times do we complain that we don’t have time to accomplish the items on our to do lists? Take advantage of this "extra" time to revise your business plan, set new goals, clean up your web site, converse with your clients, freshen your marketing plan, etc.

3. Give your current customers extra attention

As suggested in the previous point, take the extra time you have to really connect with your clients. They are also experiencing difficulty and if you are trying your best to meet their needs as best you can, they will be appreciative. Being flexible during this time also needs to extend to the needs of your clients. Just as you might have to do some things differently, they also might have very different needs during this time. We all will get through this, but it will be best if we get through this together.

4. Be persistent and patient

This won’t last forever. Successfully owning your own business is about being in it for the long haul. Success is likened to that of a marathon as opposed to a sprint. This will not last forever.

5. Learn from the negative impacts you are facing now because you didn’t plan ahead before

All businesses go through peaks and valleys. There are many factors that can affect the health of a business that have nothing to do with the current pandemic. If you are finding that you did not plan successfully for a temporary negative impact, then make a plan now to put one in place.

It is a good thing to have money set aside within your business accounts to cover payroll and overhead for a set period of time- your life boat to temporarily wait out the storm.

Being in the real estate industry, there are so many factors that can affect our bottom line- mortgage rates, seasonality, supply and demand, etc. After seeing so many appraisers close their doors between 2007 and 2010, I decided to heed some very wise advice. Have an emergency plan and set aside funds for the emergency. This money is to ride out the storms without having a significant impact to your employees or yourself.

For a number of years I have had a minimum 3 months payroll and overhead expenses covered in my emergency plan. Within my plan, if I ever within that 3 month period of time am not able to cover current payroll with new income for more than 3 weeks, then I was going to have to make some very serious changes or choices.

As of this blog writing, I can happily say that planning ahead of the storm has given me and my employees peace of mind. We have always had the ability to telecommute so the stay at home order did not have an effect. We have been flexible with the ongoing changes to what we are able to do. It has negatively impacted our level of business, but I am doing everything I can to meet my clients’ needs while remaining in compliance with state mandates. If there becomes a total halt in the number of orders we receive, I will still be able to pay my employees for a short period of time before I am forced to take any drastic measures.

None of this is 100% fail safe. However, if you adhere to these simple principles, you will have a much better chance at being one of the 25% that is able to stay in business more than 15 years.

If you would like to discuss your challenges and have need of assistance,

I would encourage you to contact me.

We can set up a free strategy session and discuss ways that I can help you be successful.