I started my first business in 2008, so the situation we’re in now isn’t the first recession I’ve faced as an entrepreneur.
And I’ll be honest: it sucks.
Surviving the next few years isn’t going to be easy. But I always come back to one of my favorite quotes: “Tough times don’t last. Tough people do.” Everything that’s happening now is going to make you a better entrepreneur. It’s going to give you a thicker skin, and it’s going to set the bar of your abilities higher than ever before.
If you’re looking at worrying signals (like the recent unprecedented spike in jobless claims), I’m not going to sugarcoat things and tell you that it’s all going to turn out ok. For a lot of people, it’s not.
But it is possible to get through this, and I’m hoping the lessons I learned from the Global Financial Crisis of 2008 will give you some ideas on how to handle the challenges that are coming over the next few years.
Build the Muscle of Surviving Shitty Times
Imagine you spent months training to run a marathon. Then, one day, your trainer tells you that all you have to do for the day’s workout is run a single mile. That’d probably feel pretty easy, right?
That’s what’s happening right now. Nobody knows how long this recession is going to last or how severe it’s going to be, but for the time being, you’re running a marathon in your business. As sales become harder and harder to come by, you’re going to have to put in even more work to stay afloat.
But someday, things are going to turn around. Most recessions actually recover pretty quickly, according to data from Statista:
And when the inevitable recovery comes from the COVID-19 recession? All of your new skills and everything you did to keep your company running are going to make success feel like running a single mile after completing a marathon.
Recessions Are a Great Time to Hire
If you’re in the boat of having to lay people off, I’ll get into that in a second. But if you have the resources to be able to bring on new hires, recessions can be a good time to connect with or scoop up great talent that’s been let go from other companies (maybe even your competitors).
That doesn’t necessarily mean you’re going to get them for cheap. But if you can give them some sense of security in difficult times, they’re going to become great members of your team in the long-run.
Even if you can’t give them jobs, this is still a good time to make connections. Back in 2008, I interviewed a great worker that I wasn’t able to bring on. But I helped introduce him to another company where he landed a position – and flash forward a few years later, I was able to get him into a role at one of my companies.
He’s now a great asset to our team, and it’s all because I helped him as best I could – even though that didn’t mean giving him a job at the time.
Innovation Happens in Recessions
Because of all the layoffs that happen, recessions can actually become periods where innovation happens the most. There are going to be a lot more people who start their own businesses, who start consulting practices, or who are able to take on innovative projects within their organizations that they didn’t have time to tackle before.
So even if you have to lay people off from your team, you may be able to hire them back as contractors. You may be able to cut their hours or deploy them in different ways. Yes, it can suck from a business perspective, but these are the kinds of situations where entrepreneurs who are willing to get creative can thrive.
Before I launched Single Grain in 2008, the team I was on laid off most of its people, and then I actually convinced my boss to turn my role into a contractor position. Then, I was able to go out and start finding new clients, which is what led to Single Grain being born.
Help Everyone You Can
Recessions aren’t all doom and gloom, but they’re undeniably harder for some people than they are for others. Do your best to help as much as you can.
If you have to lay people off, take a few minutes to check with your network or your community to see if anyone else is hiring. Whenever I’ve had to let people go, I’ve been able to make sure they have their next job lined up – even keeping them on longer until they can find their next gig.
To a certain degree, it’s a selfish move too. If you know your people already have their next position locked down, the severance package you offer can be shorter. That’s not the main reason to do it, but it softens the blow for your workers and keeps morale up for others that are staying on board.
Think about the message you send to employees that are sticking around when you say, “Hey, we’ve had to let these two people go, but don’t worry, we actually lined them up with interviews and made sure they were able to get their next job first.” I look at it as if it’s almost parental. You’re responsible for these folks and their well-being, so make sure you help as much as you can and send the right message.
First, Treat the Emotions
In terms of marketing and sales in a recession, you can’t operate as if things are still “business as usual.” People are going to be panicking, and they’re going to be looking to you for leadership. You have to calm them down first.
Now, that said, everyone is going to respond differently. You may have devs who are fairly logical about the whole thing, and they may just need to hear from you about the action steps you’re taking. But then think about your salespeople who are suddenly hearing tons of rejections every day. They may need a little more coaching or hand-holding as you figure out your new normal.
Refining Your Sales and Marketing Approach
Imagine you’ve got a humming sales and marketing process, where you get free trials through the door, salespeople talk to them, and then, boom, they close. But during a recession – especially in the earliest stages when everything’s so uncertain – your close rates are going to change. So your messaging has to change as well.
This is the time to review your strategy and test new ideas in order to figure out your new approach as quickly as possible. And when you analyze your whole funnel – including all of your marketing, your sales, and your team’s efforts – you’re going to find new opportunities or new inefficiencies you didn’t notice earlier on, when things were easier.
As an example, imagine you have a customer success team that was doing great and that hit all of its metrics over the past few years. You might not have noticed that you had underlying inefficiencies that meant things could have been even better, but when revenue disappears and customer engagement tanks, you’re going to find these issues in your strategy. And then, not only do you know what needs to improve, but if you can fix things in a bad economy, you’ll be in an even stronger position when things start to recover.
Audit Your Message from Top to Bottom
Your inboxes, like mine, are probably flooded right now with messages on how companies are coping with COVID-19. And that can be annoying, but what’s even worse are the tone-deaf promotion messages that are coming from companies that clearly forgot to check what they had queued up in their autoresponders.
Look closely at every piece of communication you’re sharing with leads or customers at any stage. Knowing that people are feeling stressed, scared, and uncertain in these times, does any of your messaging read as flippant? Does it come across as needy or inappropriate when others are struggling?
Get a second set of eyes to help you review messages and make sure you aren’t missing any automated communications. Even one poorly-worded message sent in difficult times can be enough to turn someone off your brand for good.
Look for solution-oriented pivots
During a crash, typical temptations include offering deep discounts, selling harder, or heavily retrenching staff. Some might even completely change their business model. These types of steps should be a last resort as you might make a bad situation worse.
You can likely make smaller pivots, and get in an even better situation than before. Can you keep the same client and business offering, but change the delivery method? Perhaps your product or service now suits a different type of customer? Maybe your same customers need a different solution.
I just heard about an example of this from Jason Lavis from Out of the Box Innovations. He recently won a contract for building a cloud-hosted custom database, as an alternative to the current office-based MS Access set up. The client, Setters & Associates, is a UK company that provides in-person HSE assessments, surveys, certifications, courses and workshops. When Covid19 hit, They had to pause all of their campaigns, and close their office.
Jason was, of course, worried that they wouldn’t continue with their development. Emergency meetings and brainstorming sessions soon bought some clear facts to the surface. Most of the work of Setters & Associates didn’t need to be in-person at all. Nor was the office a necessity either. Now, a new scope of work has been agreed that includes remote delivery, iOS and Android Apps, a new forum, on-demand remote learning, and much more. If you can be part of a new solution for your clients, you might find that your business becomes more robust than ever.
Manage Your Stress
Even if most recessions tend to recover within a year or two, that can feel like a long time if you’re stressed out every single minute.
As much as possible, try to do something for yourself every single day. Whether it’s yoga, meditation, exercise, pushups, or learning a new language, find a way to stimulate your mind and to keep your brain off things that are outside of your control.
For example, I’ve been listening to different podcasts that I wouldn’t normally listen to that aren’t related to business or personal development. Every day, first thing in the morning, I just scroll through Spotify to look for something new and interesting that helps me shift my perspective and take some time away from worry.
A friend of mine is learning Japanese through Duolingo. He’s not going to get fluent in Japanese in the next six months or so, but it keeps his mind off of things. It’s so easy right now to tune out to Netflix and have a drink – and sure, go do that every once in a while too. But if you focus your brain on leveling up, that’s going to help you be more fresh and be better prepared to deal with the challenges that are going to come at you in different ways.
It’s Going to Be Okay
As hard as everything seems right now, it’s going to be okay. Whether you go bankrupt and your business goes under, or you have to let everybody at your company go, or you lose half of your revenue, things are going to get better.
It’s at times like these that you realize money isn’t everything. You realize that the business you’ve poured your life and blood into isn’t your whole life. There is life outside of it, even if this is a shitty way to be reminded of that.
So take care of your people, and take care of yourself. Be empathetic to those who are struggling, and help where you can. Get creative, stay open-minded, and get ready to put in the work. Recognize there are silver linings in everything (just look at how at the positive effect on the environment as a result of the pandemic). Remember that this is a marathon, not a mile. Stay strong, and I’ll see you on the other side.
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