Summary: In today’s podcast episode, Stephen Halasnik and Author Edward Segal talk about dealing with crises, natural disasters, and recessions and how to bounce back. As a small business owner, it is important to understand that a crisis is not a matter of “if”, but a matter of “when”. Do not fall into the trap of thinking your business is recession-proof. Being able to effectively handle a financial crisis in your industry or supply chains will ultimately determine the longevity of your business and prevent job loss, high unemployment rates, and layoffs in your company.
Summary
Recognizing The Worst
Sun Tzu in his prolific book The Art of War wrote the following, “If you know the enemy and know yourself, you need not fear the result of a hundred battles”. This quote applies as much to warfare as it does to the safety and security of your business. The easiest way to prepare for a crisis situation is to be informed. If you are informed about what threats exist to your business, you can be better equipped to fight them. What many business owners do not realize is the things that happen to your business are predictable and repeatable. If you can prepare yourself for the common pitfalls, you will be better equipped to deal with the more niche occurrences. Know your history: study companies in your industry and the tribulations they faced. How did those companies overcome hardship and slowdown? What events took place that caused them to fail? What were policymakers and the white house saying and doing? It is crucial that you figure out and commit the exact answers to these questions to memory. You don’t have to be a professional economist to be informed about the GDP (Gross Domestic Product) or the stock market. Reading a trusted new source every day is a great way to stay on time for potential economic downturns. That way you will be able to account for the same things happening to your business in a more efficient manner should they arise. While focusing on the past is important, focusing on the present is just as important. Knowing what could happen is one thing, but recognizing a disaster before it occurs is another problem entirely. Stay informed: get news updates on what’s going on in your country and in the world. Noticing certain trends in the news that relates to your research into the past may lead to a realization of a potential threat to your business.
Be Prepared
In a survey from Segal’s book, his studies found more than 40% of companies do not have a plan in place for a disaster. Do not be in that 40%! Just like having a business plan in place can be useful, so can a crisis plan. A crisis plan is used to dictate to you and your employees how to effectively deal with an adverse situation or significant decline in economic growth. Constructing this plan involves carefully analyzing all the potential risks and faults of your business. If one leg of the stool gets kicked out, you have to have some glue ready to go to fix it up fast or you’ll fall to the ground hard. The first step to creating a plan is looking inwards. Ask yourself: how will this situation affect my business and my relationships? One of the ways to figure out an effective plan is to be a good listener. Paying attention to the U.S. economy and the global economy is good, but what is even better is paying attention to what’s around you every day. Talk to your employees and ask for their input. What do they think would be the downfall of their portion of work? Are your employees prepared to deal with those downfalls? Always make sure to do a reality check on your finances. Know your numbers and resources inside and out. Understand your exact economic activity. If you find an area lacking, find a way to patch that area in the event of an emergency. Plan for every possible contingency within the foreseeable future. Once you have this plan in place, check it annually by yourself and with your staff. As the times change, so do the potential threats and workflows. Make sure once you make a plan that you test that plan the best you can while a crisis isn’t going on. This is to minimize potential shortcomings of the plan and to help with the revision process. With enough preparation, you may be able to salvage your business even in a pandemic.
Missing The Alarm
While research and prior planning can be useful, the unexpected can still creep up on anybody. Who would have thought that in 1 month’s time a public health crisis like the coronavirus pandemic would force Americans into lockdown? When a disaster catches your business off guard, it is important to have a crisis mindset: be aware and be able. First, you must identify the current situation and how it might affect your bottom line. Then you must find a way to execute a short-term plan to protect your business model or pivot into a more effective direction. The easiest way to do this would be to find ways to cut costs early, but the steps you take can vary based on the company and situation. No answer to a crisis will be unique and you must recognize that. You must put a plan in place immediately if you don’t have one already and how you plan to deal with the situation. You must prepare not only for what will happen during the downturn but also for what could happen after. Disasters do not have an on-and-off switch, the effects of what happened could change the landscape of your industry significantly for years to come. While the disaster is going on, continue to push your business. Never stop marketing for one second, you never know what’s going to happen. Lastly, if you are caught off guard by a great recession or crisis, do your best to plan for the next recession or crisis. It can and will happen again.
About the Guest, Edward Segal
Edward is the author of the recent book on crisis management: Crisis Ahead — 101 Ways to Prepare for and Bounce Back from Disasters, Scandals, and Other Emergencies (Nicholas Brealey). He is a Leadership Strategy contributor for Forbes.com where he writes a blog about crisis management and communication-related news, issues, and topics. Segal has more than 30 years of experience as a crisis management expert, CEO, public relations consultant, journalist, communications director, and press secretary for members of Congress and political candidates.
About The Host Stephen Halasnik, Financing Solutions
Stephen Halasnik is the host of the popular Entrepreneur MBA Podcast. The Entrepreneur MBA podcast’s purpose is to help small businesses get over the $10 million per year in revenue mark. Mr. Halasnik is the Co-founder and Managing Partner of Financing Solutions. Financing Solutions is a leading provider of Lines of Credit to small businesses and nonprofits
Mr. Halasnik is a graduate of Rutgers University and has an Executive Masters from the MIT Birthing of Giants Entrepreneurship program. Mr. Halasnik has started and built 6 companies over 25+ years with 2 of those businesses making the Inc 500/5000 fastest-growing list. Mr. Halasnik is a best-selling Amazon author on business and regularly tweets about his ideas about growing a business. You can also find Mr. Halasnik on youtube talking about Entrepreneurship.
Mr. Halasnik loves small businesses. He lives in New Jersey with his best friend, and his wife Gina. Mr. Halasnik’s number one purpose is raising his two boys, Michael and Maxwell, to be good men.
About Financing Solutions
Financing Solutions provides an easy-to-setup unsecured business line of credit to small businesses. The small business financing product is a great cash backup plan that costs nothing to set up, nothing until used, and is inexpensive when needed. Financing Solutions is rated A+ by the Better Business Bureau and 5 stars by the BBB/Google Reviews.
Unlike a traditional business bank loan, our business credit line requires no collateral or personal guarantee (except in cases of fraud) making it an excellent alternative business financing option. Small businesses often used their line of credit for short-term expenses, working capital, to make payroll, or for a business investment especially when business cash flow is temporarily down.
Get a free, no-obligation business line of credit quote by filling out our simple 2- minute business line of credit application here.
Remember: The time to set up a credit line is when you don’t need it.
Note: Financing Solutions donates 10% of its profits to various nonprofit charities