SCORE Column: What gets a business through tough times?

Recessions are scary and as shown in a report done by the Federal Reserve Bank of New York on the 2008 Great Recession small businesses suffered more than big businesses.

The following is a chart from that report.

Contributed

Let me sum up one more chart from that report. They included a chart from the National Federation of Independent Businesses that showed the percentage change in these factors from 2006 through 2010. From mid-2007 through 2009, insurance cost, availability/quality of labor, and competition from large businesses went down, financial conditions and interest rates were mostly level while poor sales jumped by 25%.

Every recession is different. The recession of 2008 was severe, and they all have some things in common. You must hold onto your customers, there will be layoffs, costs must be cut, and Cash is King. Small businesses will be hurt more than big businesses because they usually don’t have the deep pockets of cash reserves, a well-trained management team, nor do they have as broad a base of customers. Your odds of survival are increased by solid and flexible leadership.

As I reflect on my career and think about the small successful growth companies where I worked, as well as others of which I was aware and which were success stories, they all had one thing in common, a leader who was determined and committed to maximizing the success of the business. As a SCORE mentor, I see the same characteristics in many leaders with whom I am privileged to work. All these organizations have faced tough times and worked through them. What are these special talents that I see? Here are what I think are major:

• They know and accept that “If it’s going to be, it’s up to me.” That is a mantra I learned from Brian Tracy that pretty much sums up their acceptance of total responsibility.
• Actions to be taken internally are necessary. They learn to face these fears and still move forward. Fear is a terrible drain on your strengths. Layoffs are particularly painful because they know and like their employees. Shouting and showing anger is not done!
• Another emotion that has to be faced is feeling embarrassed and feeling the need to explain to family and others what you’re going through. In this recession, like others, you are not alone, and you are not the cause of the problem, you’re the problem-solver. Your key communications are with your immediate family, employees, customers, banker, and vendors. Avoid wasting energy with others.
• They are deliberate in decision-making. It doesn’t work to cut costs across the board. Marketing needs to be cut perhaps, but those cuts are based on concentrating funds on the part of your marketing program that brings in the biggest results. As discussed above, reduced sales were a major factor in the 2008 recession. Growing with your current most profitable customers needs special attention from the leader. These leaders focus on the special strengths of their organization.
• Another skill of successful leaders is to put their plan into writing and being consistent in making that plan work. Some tweaking may be necessary, but they will not be driven off the goal and not achieve the desired results. This is not an organization driven by a committee.

Recessions are scary. They demand the best from you. That study done of the recession of 2008 also reported that the smaller companies that survived the recession had a faster recovery than the larger firms. One thing that helped me during the tough times in my career and what I have suggested to SCORE clients is to develop an advisory board or find mentors that you can tap into when necessary to talk through your concerns. If it’s to be, it’s up to you. I have seen many small business leaders grow and make it happen. You can too! Don’t give up. SCORE is here to help.

Visit www.score.org or contact me at richard.jordan@scorevolunteer.org and 218-251-4413.

SCORE has in-person and online workshops that are free to anyone with an interest in the topics, including a set of webinars on various aspects of starting a business. For more information, go to www.score.org/twincities/local-workshops
and browse through recorded, online and in-person options.

As a resource partner of the U.S. Small Business Administration, SCORE - which offers free business mentoring and education -- notes the organization has helped more than 11 million entrepreneurs through mentoring, workshops and educational resources since 1964. The nonprofit SCORE was previously known as the Service Corps of Retired Executives.