It hadn’t been a good year. Two of my consultancy clients had been forced to cancel their contracts and a third had had their loan called in by the bank who had appointed a Receiver.
Back then I mainly carried out consultancy work for growing businesses most of whom had built up debt. Most of my clients disappeared in just a few months. Livelihoods and dreams were crushed.
You’ve guessed it…2009.
I wasn’t alone. In just a few years following the financial crash thousands of small businesses were destroyed, hundreds of thousands of people lost their jobs and whole families were out of work. The human toll was huge.
I was more fortunate than most. Since I had started my business, I had worked alone, outsourcing the things I couldn’t do myself, and had worked from my home office. My overheads were minimal but I had too few clients and virtually no marketing engine. And no-one was hiring business consultants.
Luckily I had savings which we lived off for a couple of years until in early 2012 I’d had enough. It was clear that my old consultancy career was over for good and that I needed to find a new path. I re-launched as Guilford Accounting in April that year with a new business model (I wish I’d known about the Business Model Canvas back then) and joined the Entrepreneurs Circle in 2013 to build my marketing engine.
Ten years on and there are two really important lessons that I learned from those difficult years, the first of which is vitally important today.
It’s this: too many businesses were unprepared for the crash. I don’t mean that they didn’t see it coming – very few people did – but that their business models, like mine, weren’t sufficiently robust to withstand the hurricane that blew though the economy. We didn’t have solid enough foundations and strong enough structures to withstand the blast.
We are again facing a slowdown in the global economy. I doubt if many businesses have learned the lessons of 2009 in which case they will be just as vulnerable as a decade ago. Here are seven easy strategies to start to protect your business:
- De-leverage, by which I mean pay down as much debt as you can, particularly short-term debt;
- Build some ‘recession-proof’ products and services – what are your umbrellas?
- Don’t be reliant on too few customers;
- Create multiple marketing pillars to fuel your lead generation;
- Critically review your overheads – are they all necessary?
- Make sure you know your business numbers;
- Forecast your cash flow and be relentless about keeping it up to date.
If your business does need finance then find a source that will enable you to weather and storm that may be on the horizon. You’ll find details of how we can help you here.
The second lesson arising from the crash took me longer to learn: it’s that we can only learn to deal with adversity by actually experiencing failure, by living through it. And that it’s how we react to adversity that matters.
After the financial crash of 2009, which left thousands unemployed, insolvent and facing seemingly insurmountable obstacles, it was difficult to see beyond the despair and negative consequences. But a few saw what Shawn Achor calls the Third Path that leads us from failure or adversity to a place where we are stronger and more capable than before. Finding that path is challenging and when we feel helpless and hopeless we don’t even bother to look for it. And when people don’t believe there is a way up, they have no choice but to stay down.
But turning adversity into opportunity is a skill that can be learned; it starts with imagining alternative scenarios that make you feel fortunate rather than a victim, interpreting setbacks as short-lived and visualising what future success looks like. As one researcher said ‘People who can most successfully get themselves up of the mat are those who define themselves not by what has happened to them but by what they can make out of what has happened to them’.
So how well do you cope with adversity? An unexpected financial loss? A downturn in sales? The loss of a major customer? Each of these events can be catastrophic and yet I know of businesses that are stronger, more profitable and robust today than they were before these events took place.
Food for thought.
To your success.
PS The Happiness Advantage by Steve Achor is published by Virgin Books