There is no question: business owners today are facing times of economic uncertainty. But is it good or bad?
We hear a lot about the economy in the news: it's getting better, it's getting worse. But most of what's on the news is sensationalized and designed to get viewers torqued up about anything. Nothing in the news is balanced, unfortunately. If anything, it leans heavily towards doom and gloom to spike ratings.
The question many business owners are asking is this: should we be afraid?
The simple answer is, no. When we panic, we typically start making really bad decisions, especially in business. Yes, we can always use moments of uncertainty to pause and think about what we might need to take action on in order to make sure our books, cash flow, and teams are in peak condition. But if we’re not careful, panic may prompt a flight-or-fight reaction–not an intelligent, strategic response.
“I must not fear. Fear is the mind killer. Fear is the little death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when it has gone past, I will turn the inner eye to see its path. Because where the fear has gone, there will be nothing. Only I will remain.”
So, what should our response be?
First, we need to start with the understanding that much of what we hear in the media doesn't necessarily impact every single aspect of everyone’s life. Many economic problems are regional, or demographically focused. In fact, what may be a downturn for some contractors may actually translate into quite the opposite for another. At a recent contractor conference, one successful roofer reported that when the economy dips he purchases up individual properties, renovates them, then resells at a huge profit margin. Another example might be people who are nearing retirement or just fed up with running a business might in many cases sell their businesses below market value because they're just ready to get out and move on to something else. Crisis introduces opportunity–when other people overreact, they leave something behind. Those responding with a well-grounded strategy and best practices may find new opportunities in the wake of others’ flight.
Second, we need to be aware that not every recession is devastating. In fact, some recessions are fairly brief. Many think the last recession was in 2007/2008 with the mortgage mortgage system collapse. But the last actual U.S. recession was February through April of 2020–three months total. Clearly there were many people and some businesses that were having a hard time, but during these months many businesses actually made financial progress.
Third, communicate a strong message to your team. After you've taken some time to evaluate what direction your business is headed and how you’re going to get there given the present economic conditions, it's really important to let your team know how you feel. You certainly don’t want to pass on the doom and gloom that affects you in your darkest moments, but crafting a message to your employees that communicates the challenges your company is facing, balanced with a circumspect plan on how to move forward, can bring your team into alignment with your company’s mission, and give them a sense of ownership in its continued success. Crisis presents yet another concentrated opportunity to earn trust. You’ll blow that chance if your only concern is inflating people's sense of safety so you don’t look bad.
Fourth, plan for the worst, but hope for the best. There's always a rebound to economic downturns, and part of your Plan A should take into account the accelerated growth that comes courtesy of a bounceback. This would involve a readiness to expand the team, raise prices, and scale processes that take you to the next level of revenue and team growth. Planning tools like the What If Calculator (free!) can help you run quick hypotheticals on what your business would look like if you hired new employees, booked more business, or raised prices. Always be planning for growth, even when you least expect it. The best companies are in a state of constant readiness–like a tightly wound trap ready to spring into action at the slightest trigger.
Tom Droste, CEO of Estimate Rocket, coaches company leaders in sales and profit planning, and software implementation. Estimate Rocket is an all-in-one business management software for contractors that helps them run their entire business–from lead-to-paid–on one platform.