Sometimes customers call me for help when it is too late to fix their problem. Sure, money will fix a lot of things, but added investment still needs to make a return. Besides, businesses in trouble are in trouble because they no longer have access to capital. They have used up their cash and there is not enough profit to replenish reserves. But, there is always a solution. You always have choices.
I was recently contacted by an owner whose business had failed to recover from the Great Recession. It’s not an uncommon story. He downsized with the reduction in business then waited for things to return to normal. He didn’t realize that the business he had lost would never come back or that the work that could have replaced it would be different from the business he knew so well. Remember the New Economy? He missed that and as a result, he serviced his few remaining customers in the same fashion, same pricing, and ever-increasing costs. He couldn’t afford innovation or new products. There was no money for increased marketing. He crumbled under the weight of his pre-recession business model in a New Economy price and cost structure.
This owner had few options, but emphasis on few. Financially, he was technically bankrupt should his creditors decide to do something about it. One option was to continue and hope that things would turn around. He had already wisely dismissed this, which is why he called. What he needed was more choices. Option two was to pursue bankruptcy protection and risk the consequences. Like many failed entrepreneurs, this was a step he wasn’t willing to take. Call it pride, call it false hope – but denial is a powerful emotion.
Option three – the one you take when it’s too late or too distasteful to accept the alternatives – is to start over. I mean, really start over. What is an entrepreneur if not someone with a talent, skill, or product, and people willing to pay for it? This owner still had talent and clients, but unfortunately he was trying to preserve a business model that wasn’t required any longer.
Starting over goes beyond downsizing. Remember when you played Monopoly as a child? Once you had built some properties up only to land on someone else’s hotel and be forced to mortgage everything – it was so hard to not admit defeat. Your point of reference was the success of all those houses and properties you once had. Monopoly taught us patience. Pass Go, collect $200, un-mortgage one property, and try to survive another trip around the board.
Starting over in business is much the same. You have talent, customers, website, and phone number. What more do you need? Heck, that’s probably more than you had when you started in business, right? Shed the office, sell everything that doesn’t make money today, help your employees find new jobs, and focus on servicing your customers as you did so many years ago when you started out. Talent, passion, and honesty still work in the New Economy. Lose your old reference points. Start from zero and you have no where to go but up. Options 1 and 2 are still there if you need them.