The Small Business’s Guide To Surviving Tumultuous Times
By: Adam Coffey, Forbes.com
It was the best of times, it was the worst of times. It was the age of wisdom, it was the age of foolishness. When he penned these lines over 160 years ago, Dickens was writing about the French Revolution—but his words are just as applicable today.
Our country is politically divided. Inflation is high, and interest rates are climbing. We are on the cusp of a full-blown recession. Businesses across America are facing supply chain woes. We have a constrained workforce that is still reeling from the effects of a global pandemic. And, in many cities, crime rates are skyrocketing.
Individually and collectively, these realities are sobering, especially if you’re a small business owner. It’s hard to survive as a small business in the best of times. In the worst of times—when we’re facing a tsunami of events like these—it can be downright difficult. However, it isn’t impossible.
The key to successfully sailing through the tumult is to take three essential steps: remain politically neutral, build flexibility into your business and make sure you don’t overextend yourself. Do all this, and chances are good that your business will come through the storm intact.
Remain Politically Neutral
In today’s world, the temptation—even for businesses—to take a political stand is strong. We see examples of this all the time, most recently in the battle between Walt Disney Co. and Florida Governor Ron DeSantis. However, when companies take political stands, they risk alienating a large part of their customer base.
Big corporations may be able to get away with this and survive. Small businesses can’t.
Let’s say you run a landscape company. There’s a high probability that you have customers on both sides of the political spectrum. No matter what your personal beliefs are, the best thing you can do for your business is to keep those beliefs to yourself and focus on delivering the services your customers pay you for.
There are exceptions to every rule, of course. If you know, beyond a shadow of a doubt, that your customer base is entirely in one political camp, you may be able to take a stance that supports their views and doesn’t put your business at risk. However, this kind of situation is extremely rare; most of the time, it’s smarter and safer to remain politically neutral, especially during volatile and tumultuous times.
Build In Flexibility
While keeping your political beliefs separate from your business is a good start, it’s far from the only thing you must do to survive these strange and difficult times. Another key step is to build in flexibility that will allow your business to adapt to rising costs. How you do this will depend on whether you sell services or products.
If you sell services, it’s likely that you have ongoing fixed-price contracts with your customers. Make sure those contracts include flexibility in the form of price escalators that allow you to raise your rates or add fees if your costs go up.
You can build flexibility by watching your inventory levels if you sell products. When things are volatile, it’s far better to be cash-rich and inventory-poor.
After all, inventory is cash, and if a crisis occurs (like a recession, a significant downturn in the markets, or even government-ordered shutdowns), you may not have the capital you need to ride out the storm if that capital is tied up in excess products that are sitting on the shelves.
Don’t Overextend Yourself
When times are tough, it’s also important not to overextend yourself. First and foremost, this means keeping your staffing levels lean. Do the best you can with the people you have, and be willing to push your business almost to the breaking point before you hire more staff.
This is far wiser than overstaffing, especially in the face of economic uncertainty. Why? Because if you find yourself in a position where your company is underutilized and your staffing levels aren’t lean, you may have to lay people off (and pay severances).
If you run a brick-and-mortar store, there’s another component to consider: your sales cycle. By determining when the majority of your sales occur, you can staff to meet your peak demand cycle and close your physical store the rest of the time. This will help cut your costs without sacrificing revenue.
Finally, no matter what industry you’re in, it’s crucial that you build and maintain a strong online presence. This will allow you to capture sales that might otherwise be lost if you have to close your brick-and-mortar (for example, in the face of lockdowns) or limit the hours you’re open (because of staffing issues or problems with crime).
There’s A Storm Coming
When Ray Bradbury borrowed a line from Shakespeare’s Macbeth—by the pricking of my thumbs, something wicked this way comes—for his famous novel, he wasn’t talking about recessions, political unrest, or out-of-control inflation. And yet, just like Dickens, his words are apropos.
Truthfully, there’s little on the short-term horizon to get excited about. Just like in Bradbury’s novel, there’s a storm coming, and it’s going to be a big one. Your job, as an entrepreneur or business leader, is to build a business strong enough to withstand it.
It can feel daunting, but implementing the steps I’ve shared here will help you do just that. Additionally, you may want to join a peer group and learn what other businesses similar to yours are doing to fortify themselves. Working with a coach is also a great idea: they can help you reimagine your business and implement best practices for dealing with a complex and uncertain world.
Turmoil and volatility are nothing new. They come in cycles, and the storm of volatility and uncertainty we’re currently facing will pass. Until it does, though, hunker down and stay financially strong. Then, when clearer skies come—and they will come—you’ll be in a strong position to shake it off, switch gears and swing back into high-growth mode.