3 Keys To Building A Solid Small Business
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How To Be Prepared To Weather Any Business Crisis
by Lenka Davis
As with life, any business needs to know how to weather a business crisis. Economic or global changes can render your current business model obsolete or challenged. In research that looked at post economic downturns in the early 2000s and the pandemic found key factors that helped businesses get through the tough times. These factors can be applied to your small business.
“Agility has been key to success, or even survival, during the pandemic. But stability and resilience were the hallmarks of high-performing businesses in the previous major upheaval: the global financial crisis of 2008.”
Focus your attention on and prepare plans that can be grouped into three main categories.
1) Strategic Focus
Focus on core products
Focus on your best core products and services. Your customers have already voted with their dollars and loyalty so continue to offer those. Customers may also be weathering their own challenges yet, if you have offered great customer service and products they want to have in the future, they will support you. Now is the time to say no to a thousand things.
Continue marketing
Don’t cut your marketing budget. You want to let your customers know you are still there for them. For example, restaurants that had customer’s email addresses used them for communications during the pandemic shut down. One local restaurant let customers know they were still making meals in their kitchen, offering curbside pick up, and included their slimmed down menu. Curbside pick up was never in their plan, and using customer emails they had were probably only slated to be used for general marketing. In this case it was a lifeline to keep their restaurant open and their employees working.
Be on the same page
As in friendships and other partnerships, businesses are only as great as the people running them. If you have a partner or are running the business on your own, continue to keep everyone involved in your business on the same page and going in the same direction. Use each person’s super powers and encourage them to communicate with each other. Successful teams work well together because they share complementary working styles or skills. They have figured out how to get projects done.
Key points on Strategic Focus
Focus on core products and services
Don’t cut your marketing
Stay visible during a downturn helps you maintain market share
Running the business alone or with a partner, make sure you are on the same page
Have complimentary skills
For example, one likes to run the business and other is good at sales
You work in the same style
If you come from a similar company culture then how to approach the business and the philosophy work well together
2) Financial Resilience
Setting your business up to succeed means you will need to pay your expenses even in hard times. Have enough funds to get through a tough time by reviewing and tightening expenses when times are good. Set up cash reserves as soon as possible to have a rainy day fund.
Key points on Financial Resilience
Review your budget - Review and tighten expenses
Build up cash reserves
3) Organizational Capabilities
Reinvent and Adapt
When companies are affected by economic crises that are outside of their control, the best way forward is to adapt and reinvent the business. Those companies that are ready to implement a new process or can pivot can come out of the slow down successfully. During the 2001-2003 stock market downturn Apple stock dropped with the whole market to a low of $6. The drop was caused by external factors and not by anything specific that Apple as a company did or did not do. Steve Jobs continually told his team that, “we will innovate our way through this”.
“we will innovate our way through this”
Process Ready
Last but definitely not least, have a team that can be ready to reinvent and adapt to necessary market changes. Pivoting a business usually does not have to happen overnight, however, the pandemic challenged businesses to do just that. Teams that had set up processes that could be run remotely and/or online had a head start to those that had not made any progress in either of these directions.
“These organizations already had the confidence and capability to go through the often challenging implementation journey. In particular, they had learned that digitization is not a magic wand — it’s powerful only when integrated with people and processes.”
Key points on Organizational Capabilities
Be ready to reinvent and adapt
Processes and people need to be in place for implementing new transformations; train your people
Fun Fact
Apple’s Think Different marketing campaign did not only describe their customer’s mindset. It also reflected the internal team's approach to constant innovation and adaptation to market forces.”that reflected the philosophy he thought had to be reinforced within the company he had co-founded” Wikipedia
“Craig Tanimoto is also credited with opting for "Think different" rather than "Think differently," which was considered but rejected by Lee Clow. Jobs insisted that he wanted "different" to be used as a noun, as in "think victory" or "think beauty". He specifically said that "think differently" wouldn't have the same meaning to him. He wanted to make it sound colloquial, like the phrase "think big".” Wikipedia
Think victory
Think beauty
Think big
Think different
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Resources
HBR Lessons on Resilience for Small and Midsize Businesses
Four Ways Small Businesses Can Prepare For A Recession
Questions Potential Business Partners Should Ask Themselves
