Bounce Back: Part 2, Recovering from a Black Swan Event
Richard Mowery has written an excellent book, titled Bounce Back: Survive and Thrive in a Business Crisis. He’s also developed a workbook that goes with it, and the timing could not be better. The business broker and entrepreneur shares a lot of hard-earned truths, and the timing could not be better during a global pandemic.
But a global pandemic is not the only business crisis that most businesses in existence today will face. It is simply one of them. This advice goes far beyond simply a COVID related crisis to nearly any crisis.
These are often called “Black Swan” events. The term refers to any unforeseen interruption in business, and these can occur for a variety of reasons both personal and economy-related.
- A marriage or divorce.
- Owner prolonged or sudden illness or even death.
- Lawsuits or other challenges.
- Economic downturns.
- A natural disaster.
- Intentional sabotage.
- Terrorist activities or even war.
- Political and regulatory changes.
This is by no means a comprehensive list, and while all of the above scenarios sound rather dire, they can all be dealt with in one way or another and a business can bounce back.
That’s really what Richard Mowrey talks about in his book and the accompanying workbook. Any business owner should be talking a look at this book, and their own “black swan” planning including an exit plan should that become necessary or desirable. Here are some points to consider.
Planning is Vital to Bounce Back
One of the things that Mowrey emphasizes is that you never operate your business without a written business plan. That sentence is important enough to read again. More than one business owner has a business plan with a vision statement and goals that are at best years old, at worst decades old. Their business plan has little or no relation to how they are doing business right now.
A written business plan should include disaster planning. What if the worst happens? What happens to the business? How will it continue to operate? Who is responsible for what? Will the business be ready for an exit when the time comes?
Unfortunately, most business owners do not have this kind of planning in place, and they often are operating without any kind of business plan at all. But key missing points are vision statements, goals, and ways to both measure and achieve those goals.
Always operate your business as if you will sell tomorrow. That means keeping financials up to date and showing maximum profitability rather than minimal tax liability.
- Plan for the worst, and work to ensure you never run out of cash.
- The above means tracking and planning for cashflow changes.
- Take action when possible. It is better to be proactive than reactive.
- Be open to innovation and new things, but always add them to your business plan.
- Continue your education, and always stay on top of new market knowledge.
Failing to plan is planning to fail, and this old saying is never truer than in a black swan event, including the current pandemic.
Money Matters
It’s easy to say the words, “Never run out of cash” and “actively work to manage cashflow” but during a crisis, this can be much easier to say than to actually do. If your income streams dry up, what do you do?
- Cut costs where you can, according to your written business plan, the section that talks about dealing with a crisis.
- Make friends with your banker. Sometimes a short-term business loan is just what you need.
- Take on partners only if it makes sense.
- Use friends and family as a last resort.
- Remember those retirement funds. It only makes sense to dip into these if recovery from a black swan event is assured.
The key to money is that dealing with it should be a part of your overall business plan. Be sure you know where you will turn first and what that will look like in the event of a crisis that burns through cash reserves. What expenses will you cut first? What will you bring back and when? Where will you get extra funds to sustain your business through the crisis?
Planning for these extreme cases will help you with bouncing back.
People Matter More than Money
Your employees, your customers and clients, and even your friends and family are your most valuable assets. Take a look at your balance sheet: what number there doesn’t have a person behind it somewhere?
The answer is that all the numbers you see and deal with every day involve a person. That person and your relationship with them is where your business lives, dies, or thrives. The keys to bouncing back?
- Maintain customer loyalty.
- Take care of yourself and your employees.
- Don’t make excuses, make decisions.
- Remember a healthy bottom line goes beyond money and profit.
Your greatest asset is people, and your relationship with them will pay dividends long past any crisis.
The Best Laid Plans
At the start of 2020, we could never have imagined that all the plans we made in January would be shot by March. However, what we can do is plan through the crisis. Richard Mowrey understands this well and coaches you through the process in his book.
Your written business plan is a living document. Plan through the crisis as things change, and be proactive rather than reactive, but be open to reaction when it’s appropriate. Budget appropriately, but don’t be afraid to take a risk and lead the way. That means traditional and creative strategic planning.
The best-laid plans will be disrupted negatively by a black swan event, but they can also be disrupted in positive ways with sudden spikes in business or demand for your products or industry changes. Even positive changes can create challenges, and those things must be faced in a similar way to a negative event.
The key is to plan to Bounce Back and to thrive rather than just survive in any crisis.
Inevitable Change
Has the COVID pandemic brought about changes you are not prepared for? Does this mean you are ready to sell your business and move on, either to retirement or something else?
Perhaps you are an employee and have decided that owning your own California based business is the solution for you to take control of your life.
Whether you are looking to value and then sell your California business or you want to check out these great businesses we have for sale and the industry sectors we specialize in, feel free to check out the resources here, and when you’re ready, contact us. We’d love to help you navigate your exit from your business, and we’re happy to be your business broker.
