A crisis is a problem that comes as a surprise, exceeds the resources that are typically used, changes the status quo and threatens a person or organization.
As John F. Kennedy said, the Chinese word for "crisis" is composed of the two characters signifying "danger" and "opportunity." Although catastrophic for some businesses, facing a crisis head-on can result in your business emerging stronger. Business owners can serve their community by surviving, prospering and retaining employees.
In just a few weeks, our attention has shifted from innovation, growing revenue and gaining market share to survival — we've transitioned priorities to cutting costs and accessing cash. We must simultaneously prepare ourselves to come out of this crisis and take advantage of opportunities.
Your instinct is going to be hesitation to move forward on growth initiatives until you feel somehow more comfortable with an infallible plan, but you need to avoid paralysis by analysis and prioritize speed over precision. Information is changing too fast right now — the odds are that if you took the extra time come up with a precise plan, you'd only have to change it along the way anyhow. In a crisis, the real risk is to do nothing; those who hesitate will be the losers.
Your status quo has changed. Embrace it and throw out whatever playbook you had been adhering to. Whatever tactics you were using to drive results before the crisis may no longer be relevant. Allow yourself to disregard past bureaucracies that may slow you down and allow team members to have autonomous approval to both preserve and grow your firm.
That was the approach Lissie, from Chicopee, took in 2001, in the aftermath of the 9/11 crisis. Lissie, shifted from making bespoke waterproof sundries bags for the beach to eliminating the ink and instead selling clear bags by displaying them next to luggage. She sold the business a few years later, at a double-digit multiple of earnings.
During the "jobless recovery" of 2003, with the backdrop of war in Iraq and the need for government to slash taxes to get consumers back to spending, Dick inherited his father's Brockton-based coffee company. At that time, the business was pulling in under $1 million of sales across seven product lines.
Dick retrenched and jettisoned six of the seven product lines to focus limited resources on the one product he thought he had the potential to scale: cleaning supplies for commercial coffeemakers. The result of pouring the firm's resources into being the best of that niche was achieving annual earnings — not just sales — of more than $5 million.
This may be an opportunity to get back to basics. It's a good time to scrap pet projects (like consulting jobs that bring little profit and drain capacity) and ditch accommodation services (such as offering customized work without charging premiums).
It's also a good time to cancel legacy favors that have been in place for years but you were hesitant to disengage from, for whatever reason. Not only will this allow you to protect cash flow, but it will help you reduce unnecessary complexity while you move forward on new, game-changing endeavors.
During the 2009 financial crisis, Lissie bought her company back at nearly half the price from an overly ambitious acquirer who could not keep up with the debt payment schedule. Perhaps it's time for you to acquire one of your elder competitors who'd rather ride into the sunset than navigate through yet another crisis?
A crisis is a turning point, and typically we focus on the part that weakens us, but not the turnaround. That turnaround may be a major repositioning in your sector.
For instance, during the COVID-19 crisis, airlines have been among the hardest hit, and while most of the big players have spent much of their resources on informing customers of canceled flights, Mel, in Wellesley, who owns a fleet of private aircraft, is reaching out to clients and taking preorders for future flights to safer destinations.
Mel isn't just adding to his cash reserves, he's offering a new service, providing statistics on historical infection rates of past viral outbreaks, quality of local health care, population density, inbound traffic from potential trouble areas and offering a safety score.
Don't be afraid to promote your business, even in a health crisis. You provide something of value, and people want to know how you can help them.
A well-managed crisis response, coupled with, not followed by, an effective recovery program is what's needed to come out of this ahead of your competition.
The COVID-19 crisis will challenge our businesses, but it will also create opportunities. You don't want to be merely resilient. Being resilient means just getting back to where you were before. Don't let the fear of what's happening in the short term stop you from having the intestinal fortitude to make a change that will help you outpace your competition in the midterm. Don't wait for the crisis to be over — your competition won't.
Allen Harris, the author of "Build It, Sell It, Profit - Taking Care of Business Today to Get Top Dollar When You Retire," is a certified business valuation specialist, certified value growth adviser and certified exit planning adviser for business owners. He
is the owner Berkshire Money Management (BMM) in Dalton, managing investments of more than $500 million. Allen's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Allen at Aharris@BerkshireMM.com.