It is still fresh in the mind for most of us . . . the 2008/09 panic. Suddenly years of boom conditions ended with a thud in the mortgage/financial crisis, and construction and related supply/service firms were in many places in panic desperation mode. Quite a few failed. There were some successful startups (out of the ashes of the failures) and some venerable businesses worked through the storm to emerge relatively unscathed.
Of course, during tough times, there were hardships all around, even at the surviving firms, when layoffs and cutbacks dug into the core. Very few businesses escaped any impact and those which did had exceptional luck, foresight or perhaps balls of steel. (I know of one site service business that carried on, keeping virtually its entire staff on payroll. It had sold a quarry at the market peak just before the crash, and the family-owned business decided to be respectful to its employees. Nice. But rare, indeed.)
Only a fool would suggest there won’t be more challenging times ahead. Will these hard times be a multi-year (decade) pain? I don’t know. I only know from reading, research and 25 years of business experience, some rules surviving old-timers taught me. If we forget these guidelines we will be in trouble.
Separate your personal and business affairs sufficiently that your business failure won’t pull you down personally.
You don’t want to lose your house because the bank takes it when your business fails. (This touches on how big a mortgage to allow and whether you personally have secured your business debt. It also may relate to local or state rules. There is a reason many very wealthy and shady individuals keep their primary residence in Florida — because of that state’s homesteading rules.)
Never stop marketing. And develop a systematic, thoughtful approach to your marketing, and stick to it.
Related to this rule is the concept that you should never build all or most or enough of your business that it would fail if a single customer defaulted. You know the 80/20 rule, where 80 per cent of your business will come from 20 per cent of your clients. Just don’t let that 20 per cent be one, two, or even enough that their failure will blow you out of the water. If you have a model to generate leads and constantly develop and tweak it, it may well simply be a matter of turning up the dial in harder times. Of course, don’t keep your head in the sand. Things change.
Be ready to face the hard decisions quickly, before it is too late.
You know your key performance indicators (KPI), your financial dashboard, your debt service ratios and the like (I hope!). If you put your head in the sand hoping for better times, you may well go over the line. Yes, there are exceptions, and sometimes it makes sense to hold the fort. But you really need to know when to bail out.
Ideally, put yourself in a place where you don’t need to panic or stress. Then you can catch the upswing and opportunities when they arise.
I can’t say it is fun to be relaxed, comfortable, and secure from worries, when it seems all around you is going bad. But it sure feels better not to have stress. We can indeed be prepared, nimble and optimistic.