As small business owners, understanding how to manage crisis and how to deal with that is important. We have to understand what we can do to get our businesses through a particular crisis or disruption, whatever it is. On today’s show, Stephen Krausse takes a look at how we can bridge a crisis as a small business owner, especially with what the world is facing today with the COVID-19 pandemic.
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Bridging Crisis: Getting ‘There’ From ‘Here’ | Up And To The Right | Episode 033
I don’t have to tell everybody that things are a little bit crazy now. If you run a business long enough, you’re going to hit a dot-com bubble, Y2K, 9/11, a mortgage crisis or COVID-19. When I started thinking about doing this episode, I didn’t want to do an episode about COVID-19. It felt uncomfortable for me. I’m not a medical professional. I’m not a policymaker. I don’t have anything to say about those things. What I realized is that this is a significant issue, but it’s part of a bigger picture. When we look at that bigger picture, I realized that in my professional career, we haven’t gone more than eight years without a significant disruption to the economy at large. As small business owners, understanding how to manage that, how to deal with that is important, we have to understand what we can do to get our businesses through that particular crisis, whatever it is. We’re never going to have control over how security at the airport is handled or what the Y2K turned out to be a bust in terms of catastrophes. There was a lot of concern about it. We didn’t have control over what the impact was going to be. We didn’t have a small business owner’s control over what happened in 2008, but we did have to get through it. Before I get too deep into this, the good news is we did get through it, all of them. That’s something that we have to keep in mind. While COVID-19 is a serious issue, if we step back a little bit, we can take a look at how do we bridge a crisis as a small business owner?
We’re going to talk about crisis management and specifically, I want to go through a few things. Before I talk about business, we have to talk about ourselves. One of the first things we need to consider is self-care. We don’t like to talk about self-care in our society, and I’m as guilty as the next person when it comes to this, but it’s important. The next thing we’ll talk about is planning and then executing a plan to get through a crisis. The first thing I want to talk about is this self-care piece, which I’m as guilty as the next person maybe more so in not being good at this. It is something we need to talk about and we need to do our best to remind ourselves to take care of ourselves.
The first thing is finding calm. I’m not going to say remain calm because that’s unrealistic in a crisis. It’s important to remember that you’re going to have moments where you don’t feel calm and I’m going between hopefulness to insomnia to nauseated all the time. While we might not be able to remain calm, we need to be able to find ways to get back to calm. This is not new stuff, but I do think it warrants repeating because a lot of us aren’t good at it, and we need to be reminded that it’s a thing and it’s okay.
The first thing is taking care of ourselves, eating right, exercising, whatever you can do. I know at least here in Colorado, all of the stay-at-home orders are stay at home, but you can go outside and take a walk, as long as you’re social distancing, meditate and read. Here’s one for us, let’s try to have some fun. My wife will tell you that’s not my forte, but it is something that we need to be cognizant of and try to do so that we can help ourselves be at our best. As we do that, it is important because if we’re not at our best, we can’t respond our best for our business, co-workers, families or community at large. All of those people count on us. That can feel like a heavyweight, but if we take care of ourselves, we can do the best we can for them. That’s super important. We can get some sleep or at least try to get some recreation in. I can’t get too worked up about that but I do feel like it’s important to put boundaries around it. When I find myself eating Triscuits and cheese, I have to say, “I’m going to pour a few Triscuits out, and then I’m going to put the box away,” because I will sit there and go through the whole box.If you have customers calling you and there is something that you can do to be of service to them, then do it. Click To Tweet
I do think that it’s important to recognize that’s going to happen, that we are going to get stressed out and that we need some coping mechanism. We don’t all have magical Zen to reach down into the Zen bucket and get some. If you find yourself using a coping behavior that might not have long-term health benefits, recognize it. Don’t get upset with yourself and say, “I don’t feel too good now, but I’ve got to put some boundaries around that. Figure out a plan, move on.”
Let’s talk a little bit about getting the planning process put in place so that we can figure out what we’re going to do. The first thing we want to do is find a place where you can look at facts in some calm. You have to get to your calm first, so that we can look at this situation from as objective of position as we can. It’s also unrealistic to be completely objective. For most of us, we’re going to have some feelings about the situation and you’re going to have to recognize that you have to move on anyway. There’s no perfect situation to do this exercise to find the best calm that you can, find a place where you can work quietly and start putting together some notes.
The first thing is what is the real change in your revenue? This is the part where you have to say, “I’m not letting my head run away with me or my fear running away with me.” Is revenue down by 10%? Is it down by 50%? In one of my businesses, revenue is down by 75%. It has a real impact every single day on my business. What is the real change in revenue? You start saying, “If that revenue stream has been impacted in this way, what are some additional revenue streams that you can begin to put together?” We’re already in the midst of a crisis. We should be doing everything we can to A) Maintain the revenue streams we already have, and B) Implement new revenue streams. You’re seeing some restaurants are focusing on takeout. Although that may be changing in Colorado because of the statewide closure. People are looking at that, but how do you do that in the moment? A lot of businesses have up to 60 days of cash, implementing a new revenue stream in 60 days is a big ask, but we do have to start working on it. We survived all those other catastrophes that I mentioned and we’ll get through this one. There is going to be a tough time but we do have to start working on it.
What are some other revenue streams that might be available to you? We need to shift a little bit of our thinking from, “Am I selling this product, this service?” to, “How can I share value with a potential customer?” It comes down instead of this specific product and service to, “What value can I offer and how can I distribute that safely in this environment?” It’s not just a product or a service. Can you provide remote services? For beyond 50%, I can do Skype, phone calls, webinars. All of that stuff still allows me to be socially isolated but still provide value to customers. For the directed energy business that I have, that’s a little trickier because it’s a high-tech product that we supply, so we’re still investigating that. We’ve been looking at that for quite some time in terms of finding out how we can provide value in a different way than we’ve traditionally have. Can you do paid content? Can you do the courses? Could you do a paid podcast? That one maybe not so much.
We’ll see if people start adopting that as a revenue stream versus many shows like this one, and many others are free and have been forever. There’s a market expectation around that. If you can provide a podcast or video, audio content that has value beyond what you’re already doing, or you can create something that goes more in-depth about your topic, you might be able to come up with something like that. Can you provide a paid content like that? Can you write an eBook? You don’t have to go anywhere to publish a book anymore. You can publish an eBook and that can be paid content. There are options and those are some quick, virtual, remote and socially isolated ways of generating revenue. You have to look at your own business and examine what you can offer that’s potentially valuable to a customer and see how you can reconfigure things or add a configuration of a product or service that is deliverable in some format that we can do.
The next thing we talk about is how do we deal with our expenses? Some of this is pretty cut and dry. You cut what you can. If you don’t need it, you probably shouldn’t be buying it, depending on your cash position. If you have tons of cash, believe me, the economy could use you. If you don’t have tons of cash and you have to be careful, then you need to cut expenses that you need to cut and shrink expenses that you don’t have to have that full amount, whatever that might mean. Turn the heater down. That might save you a few dollars, but you get the idea. If there’s something that you can throttle, then by all means you’ve got to throttle it. Defer expenses that you can if you’re working on capital expenditure. If you’ve got a big machine that you want to put in place and you can put it off, this might be a time where you need to do that.
The Market Economy
I want to talk a little bit about the market economy because our economy, and it’s true around the world, it only works when money is moving. When we all hunker down and we stop spending, that causes the problem that we’re afraid of. While I’m not going to encourage people to be wasteful and spend money they don’t have, as a business owner, I am being careful about how I spend money. We have to also recognize that if you’re in a position where you can make a purchase, the company you’re buying from is going to appreciate that, especially at a time like this. If you can participate in the economy, we need to all participate as much as we can, because it is the only way the economy works. Moving on to my next real point here, contact your vendors as early as you can. This is an uncomfortable conversation to have, “I’m Steve. I don’t have money to pay you.” Nobody wants to have that conversation with a vendor. That’s uncomfortable. You can feel a little shame about it. At the end of the day, they are going to appreciate your openness and your honesty. I appreciate it when my customers call me and say, “I can’t make this payment.” Your vendors will as well.
Don’t go to them simply saying, “I don’t have money to pay you.” My advice would be before you make that phone call, then you do need to make it. It’s going to be uncomfortable and that’s okay, you’ll get through it. It might not be a perfect plan and what they want to hear, but if you call and say, “We’re a little cash-strapped. We need a little extra time. Here’s what I’d like to do.” Not, “What can you give me?” You’re putting it back on them to come up with the solution for your problem. Come to them and say, “I need to defer this payment for 30 days and I need to have this shipment held. We’ll pay you as soon as we can be based on that shipment.” Have a plan that you can put in place. Be open and honest about them. That does not mean that you need to open your books or tell them how much money you have in the bank. That isn’t their business. If you go to them with an open and honest statement of, “We’re having cash trouble, but here’s the plan that we’d like to go through to implement, to go forward with you,” they might come back and argue with you but negotiating is part of the process, and that’s okay too.The best plan you can do in the time that you have is the plan that you need to make. Click To Tweet
When it comes to vendors, call them up as soon as you have something you can tell them and have a plan put in place and discuss it with them. The same thing goes for your customers. If you have customers calling you, and there is something that you can do to be of service to them, then please do it because you’re going to be asking that same thing of your vendors. We’re all going to have to share the burden of a troubled economy. That’s okay. That’s part of what we have to do. If we’re nice about it to each other, then we’ll come out stronger. If your customers come, we’re all in this together, do what you can for them. If they don’t come with you with a plan because they didn’t read this, then be ready to help them make a plan and be the solution provider. Don’t say, “Call me back when you have a plan.” Be the people who can say, “Let’s talk about this, how about if you can pay $500 in six weeks?”
We’ve talked about what changes in revenue, what changes in our expenses that we can do, how do we work with vendors and customers? I would suggest putting a list together of everything that matters to you. What are the key facts in the universe that if they change, whatever your plan is, it’s going to have to change? Revenue is one and vendor participation might be another one. The availability of raw materials could be a major one. That’s something in the electronics industry, a longer and longer lead times before the COVID-19 became more of a thing. Raw material supply has become more and more difficult. That’s not going to change. That’s going to get more difficult in the future.
Even as people recover from the Coronavirus, we’re still going to have raw materials shortages for a period of time because we’re going to ramp production back up. There’s going to be a huge spike in demand, which is great for raw material providers. It means that small businesses are going to have the hardest time potentially in acquiring raw materials to do their jobs. That’s something that you might have on your list. The things that are going to matter to your position, to your plan, to use the business vernacular, the Key Performance Indicators in terms of your plan, write those down so that you can keep them at the top of mind. When they come up, you can say, “This is changing. I need to fix this. I need to adjust my plan a little bit.”
Making A Practical Plan
Let’s talk about how do you make a practical plan? We’ve talked about examining the part of the overall economy and your own situation and how you get those facts together. We’ve done this in an objective environment as much as possible. The first thing I want to say, we have to put a plan together and how we’re going to respond to whatever crisis that would be. Before I go any further, understand that you can’t have a plan for the crisis that is going to work for every situation. You can put in a framework together of how you deal with a crisis when one arises. What we’re going to do is we’re deep in one that we can come up with a specific plan of how we’re going to deal with it. Going forward, you might have to make a template so that when a crisis arises, you have an action plan that will get you to the right answer.
Let’s get back to the plan. The first thing that I want to talk about is it does not need to be a perfect plan. You don’t have time for a perfect plan, and you probably can’t create a perfect plan. If you can, please write a book and then email me and I’ll feature it on a future episode. The perfect plan is not the point. The best plan you can do in the time that we have is the plan that you need to make. That’s it. It needs to be thoughtful and it needs to be practical. You need to put some objective thought into it, which is what we’re talking about and then you need to make it practical. It has to be doable. If you make a plan, you can’t do, “I’m going to shift everything to an online store, but everything is sold through distribution and retail.” That might not be practical for you.
We have to come back to what is a plan that is practical that we can implement and some ideas around this. You’re going to have to look at your own business, the way that you add value to your customers or the way that you could add value to your customers and say, “Can I add revenue streams? Are there ways of me and my team adding value to the market that I’m not using? Can we identify expenses that we can eliminate or modify working with vendors and customers?” You put those things together and you say, “How specifically am I going to change my revenue streams? What am I going to target?” You may need to brainstorm ten different new revenue streams, and then do some investigation and realize that plan isn’t going to work. This is a side note, but I did a marketing plan that I was going to do for Beyond 50 Percent. I started talking to people in a specific marketplace and they said, “That’s not a good idea.” I had to step back and it was great feedback. I got a lot out of talking to those people, but I learned a lot about the marketplace I was trying to enter and realized that I didn’t know what I didn’t know. You may have to go through that a couple of times as you identify new revenue streams and say, “That won’t work for me or it might open a different door.” That’s the thing. It’s data.
Find out some revenue streams where you can get more data and then start working with them. We’ve got to work on the plan. We put the plan together. We block out time every day to act on it. One thing in a crisis is as small business owners, firefighting is part of our jobs. We have to block some time out to implement plans, to survive and then recover. Especially in times where we’re being asked not to go to the office or not to work, to protect our employees, families and communities from the spread of disease, that makes it difficult. Businesses can adapt to that for a little while, but you can’t go long. Most small businesses can’t go long. Block out time every day to work on creating and implementing the action items of your plan. A plan doesn’t do you any good if you don’t implement it. We’ve got to do it. Some of the things you’re going to have to do or may have to do are going to be hard, and you’re not going to want to do them, and you have to if your business is going to survive. I would love to tell you that you’re going to write down a plan and you’re going to implement it, and you’re going to be confident that you did the right thing. That’s not a luxury we get.
The only thing we know is that we’re still here this month versus last month. That’s the only validation that we often have to whether or not we took the right action. That’s why I’m saying don’t worry about it being a perfect plan. The plan has to be good enough to keep you alive until next month. That’s it, it’s survival. One of the things we have to talk about is we have to talk about people. Generally speaking, employees are our highest expense as a percentage of revenue. I feel strongly personally that you have to do everything you can for your team, but there is a limit the small businesses can’t afford. While you have to go as far as you can for your people, you have to act to maintain your business. That is a tough place to be. I’ve been there several times. I’m glad to say that it never gets easier. If it ever got easier, I would probably want to retire because that’s not the person I want to be. It is an important part of what we do to protect our business and our companies.There are going to be changes to our business, and we need to expect them to have some long-term effects. Click To Tweet
After we’ve gone through the process of identifying what the key components of our business are creating a plan to control them or to manage them the best that we can and we implement that plan. We then have to review the results and continue to monitor the changes in the environment, those Key Performance Indicators to use the keyword or that buzzword. Those critical factors that we use in our business that would affect us, revenue, expenses, raw material acquisition, the amount of work we can apply. Maybe we can’t afford enough people to fulfill every order, which would be a good problem to have in a crisis. If you only have limited resources to manufacture or produce your product that has to get managed as well, review those things because you may have to change the plan as you go forward.
I want to talk a little bit about the aftermath of a crisis. People will talk about getting back to normal. It’s been twenty years and we still take off our shoes at the airport. Sometimes you don’t get back to what normal was before a crisis. That’s okay. There are a lot of advantages to the transition to video conferencing, and social distancing may prove to have given us a push into using video more and even audio content like the audio version of this blog. This stuff as prolific as it is, it’s still much in its infancy in day-to-day use in business. We’ll see that given an opportunity to blossom, give people who might not have wanted to get into video or these distance communication tools and there are tons of others. There are Microsoft teams, Slack, Flock and a whole bunch of other ones, that there might be companies, small businesses who have thought in the past, “We’re too small, we don’t need to do that.”
There may be long-term benefits to us adopting some of these techniques that we wouldn’t have done before. There’s also the advantage of potentially having new revenue streams that you would never have done if you hadn’t been forced into it. The other side of this may be much more interesting and exciting because we were forced to take some of these actions. Some things may never change. There are many people on the planet and we travel internationally. Social distancing might need to be a new norm in a lot of ways just to keep us safe in the future because there are many people. We do travel, and viruses and bacteria can spread quickly as we know.
I would hesitate and I hope that people don’t look at the situation and go, “Two to four weeks from now, we’re going to be back to normal, whatever that looks like.” I don’t feel like that’s realistic. There are going to be changes to our business and we need to expect them to have some long-term effect. We don’t necessarily know what that’s going to look like yet. It is likely that there’s going to be as much long-term positive impact in terms of the way we do business as well as any negative impact. For example, if we get good at video conferencing, communicating and messaging remotely, we can reduce a lot of use of fossil fuels. That could be cool. There are things that we can do or things we can learn to do better in our businesses that will be good for us long-term. Let’s face it, travel is expensive. If you can get comfortable not traveling, then you’ve got a real opportunity to improve your business in the future. Not only are you doing something environmentally friendly, but you’re also doing something that’s going to be friendly to your expense reports.
Practical actions that I want to talk about, I’ve been weaving them in throughout this whole thing. I want to wrap it up a little bit by saying, take care of yourselves. In my own case, I meditate right before the show for two reasons. One, it is nerve-wracking and two, to get my head right about being able to put this together. For myself, I need to watch what I eat. You may have other things that you have to figure out, “How do I cope and is it healthy or not healthy in the long-term?” Put boundaries around that comforting behavior. That’s what I’m trying to do is say, “I need five Triscuits and then I’ve got to put the box away.”
Use social media for the social, but maybe not the media. The constant barrage of negative news and whatever that part of social media, we don’t need that. We’re getting enough negative news all the time that we don’t need that extra push. Get the most out of it if you can. I would encourage you to try to be positive on it as much as possible because people need that. You’re not going to see me there because I don’t use social media. Avoid news surfing, stuff like that can traumatizing. As small business owners, sometimes our default, certainly my default is to go to work and to come home. Trying to find some balance and try to keep your head together while you’re getting through this. Find ways that help you get back to calm. Remember that you’re not going to stay calm or you may not. I don’t always stay calm, but find ways to get there. Work through the real impact on your business and make a plan. Don’t think your plan, write your plan down and then execute it. No matter how much it hurts, you have to do that to protect your business.
I would like to say if this is a valuable program for you, please share it with your friends who are small business owners so that they can get the value as well. Before I sign off here, take care of each other and your people. You can subscribe to the Beyond 50 Percent YouTube channel and to Up And To The Right Livestream at Beyond50percent.com or on YouTube. If you’re in the midst of this crisis and you do need a hand developing some new products or services, new implementations to change the way you do business, that’s the thing that we do at Beyond 50 Percent. Call us, the phone number is (970) 218-2018 or email at [email protected]. Any topics or questions, you can send them to [email protected] and I look forward to interacting with you. If there’s a topic suggestion, I’ll let you know if that’s something I can put into a future episode. I’d like to thank you for reading and take care of each other and stay healthy.
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