Every entrepreneur faces moments of doubt, that horrible period in which you are overcome by anxiety and panic, unsure whether you are actually going to make it. You question the survival of your business. This is part of the process building a business and no entrepreneur will escape having to face such up to such challenges. Most entrepreneurs will endure such a crises at least once every one to two years as they grow their business. Such crises my include the loss of a major customer, the loss of critical employee, an interest or exchange rate shock, a production cycle breakdown, missing a critical deadline, a flood or fire or anyone of a number of different issues. In my experience, most such issues usually put some kind of strain on cash flow that threatens to put the business in bankruptcy.
When that happens there are some things that you can do to respond in an appropriate way, here are 9 things that can assist when facing a crisis. Some of them are pretty obvious, but many entrepreneurs forget them in their moment of panic:
Step 1: Acknowledge the problem No problem can be solved if we don’t admit we have got a problem. Pride, false hope and blind desperation often prevent us from openly admitting and acknowledging we have a problem and this in turn prevents us from discussing the problem with others, asking for help and putting a plan together for recovery. You have to be courageous and clever enough to admit when you have a problem.
Step 2: Measure the damage Measuring the damage often requires a deep dive into the reality of the situation. This may involve painful phone calls to customers, investors or suppliers to find out exactly where you stand with them. Get all the facts down on paper so that you have crystal clear picture of where the business is at.
Step 3: Identify the causeMeasuring the damage in step two will highlight the symptoms of the sick business but it may not highlight the root cause. Challenge your self to go deep and be vigilant in looking for the cause. Dealing with surface level issues won’t solve the problem in the long term.
Step 4: Reframe your management/business philosophy Einstein said that the definition of stupidity is doing the same thing in the same way and expecting a different outcome. If you don’t want the same outcome you need to decide what needs to change about how you are managing the business to deal with the cause of the problem.
Step 5: Create a bold but realistic plan A plan creates hope and promise by translating the changed management philosophy into actionable steps. The actionable steps can be assigned to people within the business so that the hard work of a turnaround effort is shared amongst the management team. Construct a set of goals with specific tasks, assigned to specific people with specific deadlines if you want to increasing your chances on getting out a of a business crises situation.
Step 6: Sell the plan internally and externally Communicate how you will enable a recovery to employees (internal stakeholders) and shareholders, suppliers and other external stakeholders. Use different mediums in getting your message across and make sure that people are able to understand what you are saying and what their role is in the recovery process.
Step 7: Execute ruthlessly In the end it all comes down to what you actually do, not just what you plan to do. So you need to get down to action.
Step 8: Measure progressMeasure the success of all aspects of the business (financial, customer, people and process) in the recovery process so you can see if you are making progress. This will enable you to adjust your path where necessary and celebrate success where deserved (see last months feature article for ideas on measuring performance in a business – these concepts should be applied in a turnaround effort)
Step 9: Celebrate and share successPeople are programmed to respond to rewards. Celebrating success enables a business to build positive momentum to get out of a bind.
Hold onto the words of Theodore Roosevelt “The credit belongs to the man who is actually in the arena; whose face is marred by dust and sweat and blood; who strives valiantly; who errs and comes short again and again; who knows the great enthusiasms, the great devotions, and spends himself in a worthy cause; who, at the best, knows in the end the triumph of high achievement; and who, at the worst, if he fails, at least fails while daring greatly, so that his
place shall never be with those cold and timid souls who know neither victory nor defeat."
If you want to read a full feature article on this topic see the latest issue of the South African version of
Entrepreneur Magazine
