BAD TIMES MAKE GREAT COMPANIES

Lessons of the Past

In November 2001, the Northwest Entrepreneur Network launched a new event called “Entrepreneur University.”  The event was designed to bring together business experts and entrepreneurs of all kinds to help accelerate positive results.  Following the disastrous events of September 11th, 2001, the founding members of the event considered whether to cancel or reschedule the event.  As entrepreneurs and advisors, I and others advocated to go on as planned as this was exactly the time such an event was most needed.  The committee courageously decided to go as planned, but the title was adjusted to reflect the changing circumstances.  The title became; “Bad Times Make Great Companies.”

The EU event went on to become a real success and an annual event.  As much as I enjoyed the two days of training and the opportunity to personally interview dozens of experts and entrepreneurs, it is the title of that first event that has stuck with me and been repeated many times to hundreds of clients since then.

Bad Times REALY Do Make Good Companies

It’s not the best times that make great companies because even marginally competent businesses can at least survive, as demonstrated by the build up to the tech bubble of 2000 and the build up to the credit crisis of 2008.  Each generation has had these times in one form or another.  Good times allow marginally competent management to get lazy and stuck in the mud of complacency.  Good times make some people think they are blooming geniuses and nothing can happen to them, or their business.  Eventually, the inevitability of market economics catches up with anyone who isn’t perpetually prepared for something to go wrong sometime, somehow and somewhere.  It doesn’t pay to underestimate the power of market and business cycles.

In the worst times, it's those who knew in their heart something was going to go wrong that developed plans to adapt quickly, and survive.  Sure, there are hard times for most everyone.  Cash flow is a direct cause of many sleepless nights.  Laying-off loyal staff is one of the hardest things a business owner will ever do, and there can be unimaginable stress at work and at home.  One of my clients told me that when he asked all of his business friends what’s the downside to owning a business, the one thing they forgot to mention were the sleepless nights.  They didn’t remember because it was just a normal part of the package of being a business owner.  In the end, it's the perpetually paranoid (not pessimists) that come out the other end of the crisis and are situated to take advantage of the inevitable recovery, and the next good time.

The other factor that creates great companies in bad times are the vast number who lose their jobs as companies disgorge themselves of staff, including those that have business ideas that go on to be birthed by necessity and desperation.  Many of these new businesses will fail because the owners aren’t prepared to survive and succeed long-term.   They learn too late and at too high a price.  Once recovery comes many return to the sanctuary of employment. Nonetheless, a small group will taste success.  Those few will build businesses based on sustainable value, with a healthy respect for competition, an abhorrence of waste and complacency, and a determination to see the vision of their business become a reality.  For those that survive the first phase, it will take an average of 20 years to achieve a sustainable success but when they do, they will be amongst the best in their industry, regardless of their size.

Is Capitalism Dead?

Some say that capitalism is dead but that is at best dead wrong and at worst political fear mongering.  This crisis, and others that inevitably follow, may or may not turn out any better than previous panics and crisis.  For those building or rebuilding a company, it is only one factor to be considered.  Periods of crisis can be a great time to build or re-forge your business and prepare for the recovery.  Now is the time to prepare for recovery whether its six months, or 18 months away, or even longer.


Time for Running Shoes

Now is the time to refine your business and build a superior marketing organization, then beat the heck out of the competition that remains.  One of my favorite stories is of two guys hiking in the woods who come across a bear.  As the bear starts towards them one guy stops and takes off his backpack, then takes out his running shoes and puts them on.  His friend turns to him and says; “hey man, you can’t outrun that bear!   The first guy then says to his companion; “I know, all I have to do is outrun you.”  The bear is the economy; the other guy is your competition and now is the time to put on your running shoes.

Regardless of the business, now is the time to take action.  Now is the time to decide which type of company you’re going to be a part of as there are two types during a crisis.  The first is paralyzed by fear and hoping to survive while waiting for the recovery.  The second is perpetually hunting for customers and doing whatever it takes to win them over.  The first will be out of business and use the economy as their excuse.  The second will be celebrating and giving partial credit to the economy for their success.  Be the latter and have a party to celebrate your success.

Copyright 2008.  Corey Hansen is a licensed financnial advisor whose practice focuses on serving the unique needs of business owners and key staff, and he is the co-author of the book; “Best Practices of High Performance Entrepreneurs”

Copyright 2008-2009  All Rights Reserved