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Being able to deal with plot twists in business has become the indispensable skill for long-term business survival in every environment, but especially in times of economic and political crisis. Every independent professional, business executive, manager and business owner must be able to deal with the proverbial plot twist…. the unanticipated event or scenario that forces a radical change in direction or outcome. The unexpected has always occurred, and business leaders have always had to deal with it, but this type of resilience is more important than ever for several reasons.
First, the world is in a transitional period, politically, economically, culturally and technologically. Business is becoming increasingly global in both structure and operations. Culturally, America is close to becoming a “minority majority” nation, resulting in a diverse and less-predictable culture. And technologically, every process and business is being disrupted by machines and artificial intelligence.
Second, the pace of change is rapid and relentless, placing an increased strain on everyone in business. Everything is happening faster and people are expected to think and do things faster. Opportunities appear and disappear at a lightning pace. Nothing stays the same. In fact, the one constant is that everything is changing—unbelievably fast.
Third, changes are coming in areas and in ways that can’t be predicted such as a global pandemic. Every purposeful action produces unintended, often-unavoidable consequences. The butterfly effect is magnified more than ever. And the inability to predict consequences is even more difficult when the accelerating pace of change is added.
All of this makes it harder when things don’t turn out as planned—when the servers go down or the network hiccups or the economy grinds to a halt. It is precisely when the story experiences a plot twist that what is needed most is the capacity to withstand stressors without becoming dysfunctional. Here’s how.
Tear a page from Jeff Bezos business playbook. Bezos did not just launch Amazon selling books and music and get comfortable. He went on to add all types of products. And when Amazon took off, he expanded into other business ventures including web services, entertainment, publishing and more. For business owners, it makes sense to diversify their product line, clientele, strategies and even business areas. Having all revenue come from a single client, a single website or a single audience is inherently risky. If that well dries up, then the business will fail.
For example, an ad agency that specialized in travel, tourism, aviation and hospitality found themselves in a world of hurt when the pandemic began and all of those sectors were paralyzed at the same time. Being able to service the healthcare and pharma industries would have allowed that agency to pivot and service the increasing needs of those clients. The problem is best expressed by the old saying, “don’t put all your eggs in one basket.” It is essential to have multiple clients in a variety of sectors to ensure that there is always a revenue stream.
2. Build a Reserve
No matter how solid the client base, an unexpected slowdown in the general economy or particularly rough seasonal dip in sales can reduce or eliminate a business’s profitability… and maybe even cause it to fold. The best way to buffer from those kinds of unexpected economic issues is to keep reserves that can keep a company afloat for six to 12 months. That’s not something that can be amassed overnight, but it is a good target to aim for when times are good.
3. Budget Carefully
Business expenses such as equipment, building and payroll can be a challenge for small and growing businesses. Businesses will often underestimate expenses such as marketing, sales and inventory which can drain profitability. It’s important to budget. Carefully research costs and establish a budget to ensure that unexpected expenses don’t get out of control.
4. Be Flexible and Nimble
It is important to adapt to changes in the market or changes in the client’s needs. Staying on top of customer needs and wants is key. This means being aware of the latest technology and what up-and-coming generations want, need and prefer. For example, a builder that was producing custom luxury homes might need to pivot and build more affordable entry-level townhomes during a recession. The same is true for sales approaches and marketing tactics. Print ads might be replaced with social media ads. Or a newsletter might be replaced by a blog or podcast. Monitoring change is key to being able to spot the need to change.
5. Stay in the Know
Companies that don’t stay on top of the changing state and federal regulations can be blindsided. It is important to always stay abreast of changing laws and regulations. One of the most common plot twists that a company can experience is regulations that can catch a business by surprise. Businesses that stay on top of imminent changes in regulations can take steps to prepare and even take a plot twist and turn it into an advantage by being compliant when others aren’t. This is where having a team of trusted advisors, including a CPA and an attorney, can help avoid having a plot twist turn into a plot crisis.
6. Secure Financing
One of the most common plot twists that a company can experience is the unpredictability of revenue. For some businesses, it is hard to get clients to pay bills on time. For other businesses, revenue streams ebb and flow with the seasons. It is important for a business to have cash flow to ride out times when the plot twist is low cash flow. That’s when business loans and lines of credit come in handy.
7. Stay Calm
When the plot twist eventually happens, stay calm. When faced with a challenge, it is important to keep it together when everyone else is going nuts. When everyone is panicking and overreacting to a situation, it is important to be able to think clearly and rationally in order to devise a plan of action that results in resolution, not chaos. That is impossible to do when in a state of panic. So stay calm, cool and collected.
8. Ask for Help
When the inevitable plot twist happens, it is important to have an inner circle of support available to help. This can be extremely helpful during difficult times. To be ready for that moment, it is important to curate a list of reliable, solid contacts that can provide advice, helpful tips, and level-headed brainstorming – especially in emergency situations. That should include a strong group of colleagues, mentors, and business advisors. Also develop a cadre of resources that can supply extra help when needed like a staffing agency, a business group, a computer specialist, as well as suppliers, vendors, and specialists that service the business or industry. The more the better.
9. Prepare When Possible
Plot twists, by definition, are unpredictable and unexpected. So preparing for them may seem counterintuitive or impossible. However, most would agree that prevention is always better than trying to find a cure. By putting preparations in place for dealing with problems that come up often, it is possible to avoid getting ambushed as often. Think about fires that have been put out more than once. Which of those issues is it possible to prepare for and which can be avoided altogether? That’s a starting point.
It is impossible to create policies and procedures for every eventuality that might occur in business. Unexpected problems arise. It is important to include some contingency plans, identify people who can help in the case of problems, create a great playbook and act on the lessons from plot twists. Being prepared for the unexpected will ensure you know how to react should any plot twist arise.
Quote of the Week
“I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.” Jimmy Dean
© 2021, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.