This post is for entrepreneurs or those who work in small business. Last weekend, I had the opportunity to speak for the Center for Innovation and Entrepreneurship at the Women Inspiring Entrepreneurship conference, and I was asked to speak on this topic.
My goal in posting this is two-fold: 1) to recap for the audience who attended and 2) to share some valuable ideas that will help business owners make progress regardless of the economy.
As I told the audience on Saturday, my father is Mr. Entrepreneur himself. He and I have had countless conversations about business, and most of what I know about business comes from him and his vast experiences.
First, allow me to define a feast as a season of great sales and growth when the money is flowing and life is good. During such a time there are a few things you should do and keep in mind in preparation for the famine.
1) Feasts are always short term. Generally, the market will not let you feast long. The markets will catch up via a competitor or supply and your season of feast will end. This should not surprise you.
2) Don’t get carried away. Often, companies are so excited during a time of feast, they make poor long term decisions. For example, they serve contracts to new hires, expand their operations, move to larger buildings and ultimately create more overhead. When the feast subsides, these companies find themselves in big trouble.
3) Stash your cash. When cash flow is good, make sure you save some. Save enough to carry your business through at least 6-12 months of famine.
4) Maximize all investments. Employees, buildings, equipment, supplies, inventory, etc. are all investments. During a time of feast, rather than expanding, creatively maximize the use of every tool in your belt.
5) Value your leads. It is easy to let potential sales leads slip through the cracks when you are busy and “busy” does not even begin to describe the time of feasting. Remember to make time to follow up even when it feels like you don’t need too.
6) Keep your books. As a small business owner, you are probably the accountant. Again, busyness is not a good excuse for falling behind on your records. It is a huge headache to back track. Trust me.
7) Push to the limit. Because it won’t last, milk the feast for all its worth!
8) Renegotiate your deals. If you need to refinance or re-negotiate a contract, do it while your numbers are in the black and that balance sheet is looking good.
Now, for the famine. Allow me to define famine as the opposite of the feast. Here are a few tips for handling a season of drought.
1) Don’t panic. We have all been there.
2) Do react. Immediately. Do not sit and wait, hoping for a big break. As soon as you recognize the slump, adjust your costs. If you keep paying out and spending as if nothing has changed, it won’t be long that you are in big financial trouble.
3) Get creative. You will need to cut costs while performing a new marketing strategy. Technology gives us a huge advantage and many ways to promote our businesses for FREE. You may have to learn some new skill sets, but if the money is not there it is not there.
4) Communicate with your employees. Make sure your employees understand your plan for adjusting costs and why it is necessary, preferably BEFORE cuts are required. In small business, employees must understand there are no guarantees and that employment is sales based. It is not personal. It is entrepreneurship.
5) It’s all YOU. Depending on the size of your business, you may become the one man or one woman show during a time of famine. It’s okay. It is healthy to spend time in the P.I.T….a.k.a…Putting In Time…for no pay.
6) Maximize downtime. Because you aren’t nearly as busy, use your time wisely and get some of the not-so-fun things done that have been on the back burner. Spend time doing research, brainstorming, or setting new goals.
7) Know your out. As an entrepreneur, don’t expect a bailout. Have a plan and strategy for exiting your business, whether it be to sell the business, sell the inventory, find a partner, etc. Networking is key. Never burn bridges.