Hey, all you Chicken Littles of the world. Contrary to how you are feeling, the sky is not falling. Yes, there’s no way around it–this has been an extraordinary year, and the sheer magnitude of the calamity and sorrow might make some entrepreneurs inclined to simply pack it up and call it a disaster.
But this is not the time for inertia and despair or running around like the proverbial scaredy-cat.
If your company is among those with a place on the Inc. 5000, you have already had to overcome incredible obstacles (not to mention the pain of broken posteriors) to achieve that position. And that’s why now is a good time to acknowledge how far you’ve come and to remind yourself that you have already achieved something great by beating the very long odds every new business faces.
And now that you’ve told yourself, “Well done, you,” get the hell back to work.
Instead of dwelling on the negatives as so many others do, realize that their preoccupation gives you a chance to one-up them. It’s not as if many of us haven’t been in a similar position before. The Great Recession of 2008 was not that long ago.
In fact, to be really contrarian about it, think of this catastrophe as a gift. The gift of challenges and opportunities. Challenges are what make business so exciting. Now’s the time to look for new, sustainable opportunities to grow your business and make it stronger. Don’t think short term and shift your production line to making ventilators, facemasks, or hand sanitizer–that gap has been filled, admirably.
Focus on the long term. If you don’t, you ultimately run the risk of sending more people to the unemployment rolls. And speaking of rolls, of the various founders we work with, one could barely keep up with fulfilling the sudden demand for her bidets as a result of the crazy toilet paper shortage. And today–wait for it–her company is flush with cash!
This environment creates opportunities to become more creative–to do what you are good at, but differently. A beverage company in our portfolio was forced to find an alternative way to market its seltzers when a major retailer stopped stocking new products. So when stores start filling the shelves with new products again, the company will have multiple distribution channels for its beverages.
Every business owner experiences hardship at some point, and it’s never pleasant when it’s happening. But if things were always hunky-dory, then we’d all become as complacent as the damn frog that stays too long in the soon-to-be-boiling pot of water. The businesses that make it through downturns and emerge stronger are the ones that are nimble enough and resourceful enough to create new opportunities. Specifically, it’s small businesses like those on the Inc. 5000, not the stockholder-beholden behemoths, that ultimately drive any recovery.
So my advice is to take this opportunity to build for the future.
Consider Big Ass Fans, which I founded in 1999. Within a couple of years, the dot-com bubble had burst, followed shortly thereafter by 9/11. At the time, our company had only a handful of employees, and we weren’t really affected by what turned out to be a very brief recession.
But the Great Recession of 2008 was a different story. By that time, we had more than 130 employees and had appeared several times on the Inc. 5000. (Before I sold the company in 2017, I’m proud to say, we appeared 11 consecutive times.) Because we sold directly to customers, we heard intimations early on of trouble and started planning before the recession started.
I knew we needed to do something, and I committed to not laying off any employees. Because who wants to be that kind of CEO (or Chief Big Ass, in my case)? We also knew things would get better. Because they always do. And when that happened, we would need those people. If we’d fired them, what were we supposed to do then? Go knock on their doors and ask sheepishly if they’d like their old jobs back? Say to them, “Hey, sorry about what happened, but we can use you now”? Just imagine how they would have responded. (I doubt this magazine would print it.)
So we figured out how much business we could lose and still maintain our workforce, and we came up with a new way to make money.
Using people already on our payroll, we started a division for installation, which we had never done before because, quite simply, I didn’t want to do it. I’d had enough of it in my previous business, and installations didn’t interest me. But suddenly, installations seemed, well, riveting.
As a result of our work developing the installation business, revenue declined less than 10 percent in 2009, while our peers suffered losses between 30 and 40 percent. Doing our own installations had the added benefit of reducing the customer service problems created by outside installers unfamiliar with our fans. And our employees definitely appreciated that there were no layoffs or furloughs. Our usually generous bonuses were severely reduced that year, but the staff assured me that retaining their jobs was an acceptable tradeoff.
Launching a new division worked out well for the company, and we could act quickly to bring it about because of our size. Can you imagine the AT&Ts of the world deciding in a week to offer a whole new service? It’s like a skiff versus a battleship. The smaller you are, the faster you can respond and change course. That applies to ideas that work and ideas that don’t–we had a few of those over the years, too.
Another thing we did during the recession was take advantage of much cheaper advertising. Then, when people slowly started to spend money again, we were ready to go: We had all our employees, and more potential customers knew where to find us thanks to our ad spending. We exited the recession stronger than ever. Over the next 10 years, we grew our 130 employees to more than 1,000 and increased revenue from $35 million to $265 million.
If people had told me before the Great Recession that we would be able to grow as much as we did, I simply wouldn’t have believed them. The recession proved to be our tipping point, and this time of tumult may be yours.
The economy ebbs and flows, and no matter the cause, every downturn is like a low tide that leaves more beach to explore and more interesting things to discover. And entrepreneurs like the ones on this year’s Inc. 5000 make the best damn beachcombers I know.
The post Why a Recession Is a Perfect Opportunity to Build for the Future appeared first on Inc. and is written by Carey Smith
Original source: Inc.