What do Henry Ford, Walt Disney, H. J. Heinz, and Donald Trump have in common?
Serial entrepreneurs like Sir Richard Branson are also no strangers to business failure and have the battle scars to prove it — in my early business career, one of my companies went bust and I have survived 3 recessions and business situations that would have floored many, so I am talking here from personal experience.
Some people say that to be a true entrepreneur, you must experience business failure and I wouldn’t necessarily go that far, but I can tell you from my own personal experience that when things go wrong in business, which at some point in your business life they certainly will, it is often the time when you learn the most.
Stay Calm Under Pressure
It’s the last thing you want to hear when you are facing immense business problems, but when my first recruitment agency got into trouble, that was the attitude of my then business partner, who seemed totally unfazed by the whole process.It must have stood him in good stead because just a few years later he floated another successful recruitment company that enabled him to buy a premiership football club… which then promptly suffered the same fate as our first agency.
But undeterred, he came back from the ashes and launched another business and bought another football club!
I think he invented the term “bouncebackability!”
Prevention is Better than the Cure
I really don’t want you to have to experience anything like the above examples and it is far better to spot trends that can lead to trouble, rather than having to face a crisis.
It’s always good to keep an eye on the global economy and remember that every company falls into an industry category – if that industry starts to decline globally, then there will be an effect on everyone operating within it and it just depends on what that effect is, plus the strength of the company to withstand it.
For example, if you are in the construction industry, you will have noticed that during the pandemic, the cost of timber rose dramatically and if you are manufacturing timber goods, your prices will have had to rise accordingly, which can have a huge impact on sales.
Sales and cash flow go hand-in-hand and I have written articles on both in previous editions, so I won’t cover them again here, but they are the key drivers of business performance, but what other factors can you look for?
Here are some that many companies miss:
- Global economic and geopolitical factors – as I’ve said, they work their way down the chain and can affect the smallest of businesses.
- The impact of technology – automation has and will continue to disrupt many industries, so make sure you keep your eye on any technological developments in your industry.
- Disruptive competitors – don’t get caught flat-footed by a competitor that can do it better, faster, and cheaper.
- Regulatory changes – a new taxation law in 2000 changed the way many freelance contractors were taxed impacted the staffing services sector in the UK.
- Cybersecurity – I once had 3 business websites hacked in the US and thankfully, I was not dependent on them revenue wise.
Many small businesses and large ones for that matter, are too entrenched in their own worlds to see the bigger picture and I talk here from my own experiences. I was so focused in building my global tech-staffing business in the 90s that I didn’t take into account that all of the economic indicators were screaming out that we were at the height of a tech boom, and you know what comes next!
And there is something else I want to talk about – people sometimes accuse me of being negative when I talk about looming recessions, risk factors and other issues that could adversely affect businesses…but I am simply a realist.
I look at the positive and negative sides of a situation, embrace them both and then move forward with a positive attitude!
I am always aware of the negative aspects of everything, but I don’t focus or dwell on them.
I am not an accountant or licensed insolvency practitioner, so I cannot give you advice, but I have been through some extremely tough situations over the years.
You have to remain as calm as possible and try to look at the situation logically and work through it systematically.
Next, you must get specialist advice and that means talking to your accountant and lawyer to make sure you are not doing anything illegal.
Now you have to see if your business is viable – you will certainly have to cut costs and improve sales and in my case, after the crash of the tech boom in the late 90s, I had to trim over a million in costs just to survive. I thought it was impossible, but when I worked through the figures with my accountant, we found out it could be done…and we survived by the skin of our teeth!
I was also extremely careful not to throw more money at the problem as I had learned that lesson when my first business went bust and I put my house on the line, which I ultimately lost.
A Quitter Never Wins and A Winner is Too Stupid to Quit
Finally, never quit and I know this is easier said than done but look at the famous entrepreneurs I have mentioned that have bounced back to make their fortunes!
As my former business partner told me way back – you can lose all material possessions, but nobody can take away the part between your ears…and you can always live to fight another day.