Tough times can make your business more agile and resilient, and inspire you to do more with less. We explain how learning these lessons early on can help your business develop, grow and succeed.
Running a new business during tough times might seem daunting, but doing so can force you to learn valuable lessons which will stand you in good stead far beyond the recession. So, how can today’s experiences be turned into tomorrow’s wisdom?
Becoming more agile and resilient
Firstly, running a business during adverse times helps your business to become more agile and resilient. The ability to identify change and react decisively to it is a fundamental part of business leadership. Warren Bennis, an influential leadership expert, points out that outright success can be detrimental to business leadership because “there’s no opportunity to learn from adversity and problems”. In this sense, learning to spot negative change and react to it are valuable lessons that business leaders can take value from.
The most practical tip for managing change is to see it coming. Awareness is crucial. Ensure you conduct regular monitoring and analysis of what is happening both inside and outside of your business. Regular business reviews and business and financial planning can help to identify where your business is in relation to your long-term plans. Good communication between management is important, as is gathering knowledge from employees, suppliers, and even customers. Ensure your marketing activity identifies changing customer needs and that your product or service offerings are adapting accordingly. Importantly, look for opportunities as well as threats; changing times may present significant competitive opportunities. Through stellar awareness, businesses are given more time to adapt to change, so be sure to keep your finger firmly on the pulse.
Doing business by the bootstraps
Another lesson learnt from doing business during a recession is the art of bootstrapping. Bootstrapping is an informal term reflecting the development of new initiatives with little or no access to external resources, such as bank finance or investment. In a recession, we are often forced to survive on less. This can slow growth, but it can also help businesses to squeeze more value from the resources they have by avoiding frivolity and over-zealous spending. Limitation is also known to spur creativity and innovation; for example, Google Mail was created by just one employee working on it in his free time of just one day a week.
One practical tip when bootstrapping is to appreciate the relationship between spending and value. Look at individual costs and ask: What value does this spending provide? To illustrate, a costly marketing budget might seem prohibitive during a recession, but then again, more must be done to attract and engage with customers, and thus such activity might be invaluable. In contrast, consider costs which offer no value – or in other words contribute nothing but waste. It is these wasteful areas that go unnoticed when money is plentiful. Rigourously questioning your spending is a strong discipline which maximises value, minimises waste, and improves profitability. Importantly, banks and investors like such discipline; if you can clearly demonstrate the value your spending provides, financiers might be more inclined to provide resource to support your aims.
Pushing things forward
These two subjects are often forgotten during boom times, when markets are stable and finance is easier to access. This is why running a business during a recession can offer invaluable experience. Both businesses and their leaders can take strength and wisdom from adversity and become more agile and resilient to change. And start up businesses that learn to ‘make do’ can take forward valuable experience in how to progress on limited resource, be more creative and innovative, and obtain more value from their spending. Such qualities are beneficial from start up right through to maturity. One day, such disciplines may help to deal with future challenges, launch new initiatives, or at the very least, maximise the value and profitability of your business.
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