Most entrepreneurs who have been in business for any length of time have experienced a heart-stopping phone call or email that changes their mood from easy-going confidence to sheer panic and desperation.
If the moment came with a soundtrack, it would yell SCREEEEEEEEEEEECH!
And despite the fact that you know that you should always be prepared for a turbulent market or unstable client, it always catches you by surprise.
I know that I have always been shocked when what I perceive was a “sure thing” dries up before my eyes. Like when:
- I invested about $15,000 worth of time designing a training program for a longtime and stable client. The night before I was to get on the plane to deliver the 2-day workshop, I got an email: “The training is canceled. We just learned today that we are being acquired by Computer Associates and have stopped all programs in process.”
- My husband’s formerly supportive client (who had promised “years of work” on a big construction project) declared bankruptcy after having him work one month straight of overtime, on a job site 95 miles from our home. A year and a $26,000 outstanding invoice later, we are still wrestling with the developer for payment.
The only good thing about these moments are that they give you lots of experience and character. I would even venture that how you react defines your success as an entrepreneur.
So how do you recover in the moment?
- Don’t panic – surrender. This sounds wildly naive and simplistic, but I am a changed woman since I adopted this philosophy. After yet another unanticipated stop to one of my husband’s projects, I decided that I was not going to worry or stress about the loss of income. Because, really, it would just cause me to feel uncomfortable and worried, which I would transmit to the little baby in my belly. So instead, I smiled, and honestly said to my husband “Honey — everything is going to work out! I know we can make it happen, so go out there and shake some trees.” And guess what? It worked out, and his business has doubled each year for the past 3 years, all in a tight and rapidly changing construction market.
- Work your network of trusted allies and supporters. As soon as you can, get on the phone to your trusted cohorts and see if they know of available work. You don’t need to beg or appear desperate. Just let them know specifically what you are looking for, and see if they know of anyone who needs help. And it doesn’t hurt to outline your strengths or services in an email, since sometimes those who know you well don’t realize all the skills you have or all the services you offer.
- Ask yourself “of all the things I could do, what is the quickest path to money?” It is logical to want to run in five directions when you are desperate to bring in some income. But this will only serve to frazzle and fragment your efforts. Instead, do what my friend Andrea Lee preaches which is to look for the “quickest path to money.” If you are a coach or consultant, how could you quickly make a couple of thousand dollars? Could you create and promote a hot teleclass? Finish a long-languishing product and launch it? Propose an all-day workshop? Pitch a paid presentation? Often, you have financial opportunities right under your nose that you don’t take advantage of.
Given the nature of disasters, the best antidote is prevention. So before a nail-biting situation occurs like I described above, how can you plan for unanticipated calamity?
- Be extremely generous with your time, resources and referrals to your professional network. This will ensure that when the time comes that you need a favor, people will reach out and help you without hesitation. So as much as you can, offer guidance and mentoring, pass on interesting articles or posts, refer clients, act as a reference to help people get jobs, share work opportunities freely, and act as “matchmaker” with symbiotic contacts in your network. Mind you, you should only have trusted, kick-butt people in your “inner circle” network so that you feel good referring them and they can really help you when you need it.
- Secure financing and lines of credit before you need it. Banks or credit unions are much more likely to extend favorable terms and sums of credit while your business is flush with cash. Secure a couple of good backup sources of cash, just in case you need it, so if you hit a rough patch, you will still be able to pay your bills and employees.
- Never get in a rut in your business. Always be working on the next phase of your development which can include new products, programs, services or markets. That way if one opportunity dries up and you have a window of time to give birth to a new product, you can take advantage of it.
- Diversify your client base. I had a rule in my old consulting business that I had to have a minimum of three different clients at one time in order to feel secure. Most were large corporations with high dollar projects, but I still wanted to make sure that I was not reliant on one client for all my cash flow.
- Keep your fixed expenses to a minimum. When times are good, it can be tempting to hire a whole bunch of people to help, buy a more expensive vehicle or upgrade your home. While there is nothing wrong with wanting a better life for you and your family, make sure you don’t upgrade your lifestyle quicker than is sustainable.
- Keep your eyes wide open about your market. When I worked in Silicon Valley as a consultant where everyone was “smoking web crack,” as I heard one speaker say, I knew it was only a matter of time before the market would shift and my goldmine of rich technology companies would run into trouble. So I cultivated new relationships in the financial services and insurance industries, and when the inevitable technology crash occurred, my business fared well. Study your industry and make sure that you are aware of the risks and have a backup plan if disaster strikes them.
- Save for a rainy day. Your financial adviser and grandpa were right … you should have a healthy cushion of savings set aside in case of emergencies. This is the hardest advice for me to follow, but it is very, very wise. Set up an automatic monthly deposit to an account that is NOT tied to your regular personal or business checking account. I heard someone suggest that it be a bank or financial institution that is inconvenient to get to and has few ATMs.
- Cultivate a mindset of “disaster = opportunity.” It really is true that great things can come from really difficult situations. When disaster hits, ask yourself questions like “How might this motivate me to do something I have been avoiding?” or “How can I take a radically new direction in my business that will be more energizing than what I am currently doing?” or “What can I learn from this experience that will benefit me and others in the future?” Questions like these will radically shift your emotional reactions, and could turn a slasher scream movie into an action adventure.