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Five Tips to Lead Your Small Business Out of Crisis

Posted on April 7th, 2020

Five Easy Steps to Move Your Small Business Out of Crisis

 

As a small business owner, you know how hard crises can be to handle. Your company suddenly stops bringing in revenue, or a key employee suddenly leaves. Rules, methods, and routines may no longer work anymore. You begin to feel desperate and belief that you are on the brink of losing your company.

 

Don’t let fear take over. There are many strategies to help you and your company through these hard times, and I want to share them with you. I will explain a strategy that has helped me manage a crisis within my business and life, through five simple steps.

 

A terrible mistake:

 

I opened my law office, Silverman Law Office, PLLC, in 2012. I became, what most would consider as a successful entrepreneur or business owner in a very short time. I felt that I had plans and a strong mission. However, I did not have a clear understanding of what my firm and employees were capable of without me, which was a mistake. Let me explain.

 

In the beginning, I employed a single person, me. I was passionate and deliberate in my actions. I worked hard, 24/7. In a matter of three years, my firm grew to employ 10 team members. I was proud, because no one had taught me that this was possible. Little did I know that my rapid growth without a clearly defined strategy would almost ruin everything I had.

 

The thing is, I am good at multitasking. For years, I had been helping my employees do their job, but they got used to me solving all of their problems. So, it was inevitable, that as we grew, I could no longer solve everyone’s problems. The firm slowly started falling to pieces.

 

As with many small business owners, I had trouble delegating authority to my team. My lack of faith in my team’s ability to handle their jobs was crippling the business. We hired a bad employee who was tearing my company apart from the inside with a toxic attitude and everyone on my team kept waiting for me to act. The problem was, that I had my head so buried in the sand that I did not know that this employee was poising my own well. I had to deal with the crisis and quickly. So, here’s what I did:

 

How to deal with a crisis 

 

  1. Admit you have a problem

 

Admission is always the first step, so you have to take the initial step of admitting that your company is in crisis. If you choose to do nothing and ignore the problem, then how can you solve the problem. The power of denial is undeniably strong in all of us. Our brains trick us into believing that denying the problem is the best way to keep us alive. However, that fear of facing the problem will not get us out of crisis.

 

It’s so easy (and comforting) to linger in the past where your company was a huge success. Past success does not guarantee future success. Therefore, focus on what you can do now to ensure a better future. Every step forward creates momentum and momentum kills fear.

 

Please, remember that denying a crisis never works and that action, whether right or wrong, is the only way to begin to solve the true problem that has you in crisis.

 

  1. Optimize your workforce

 

Evaluate every employee and if a given employee does not bring value to your company, then you face the hard task of firing that employee. Hard times are all about hard choices, and you will have to exercise authority to cleanse your company of workers who are not as effective.

 

Small companies spend between 20-40 percent of their revenue on employee wages and benefits. When crisis arises, you may be pressed to cut spending to survive. The main reason to terminate non-productive workers has nothing to do with money but, rather, the efficiency and culture of your operations.

 

Let’s imagine that you have a person who cannot finish a project on time. Should you give him or her one more chance? If you have the funds, then maybe you have the time to work with that employee. However, if your business is on a shoestring, then waiting is not an option. You need to remove the employee sooner, rather than later, to keep your business moving forward. Do not make the mistake of wasting time, resources and money, not to mention the good will of the rest of your team, by not taking action to protect the rest of your team. You are better off firing non-efficient employees now, rather than losing your top performers.

 

Optimize your business until your budget is balanced. All other companies balance their budgets, so you must do the same.

 

  1. Cut your expenses

 

Have your ever heard of the Pareto principle? It demonstrates that 80 percent of the effect is always a result of 20 percent of the causes. This principle can be applied to your life and your business. Therefore, 20 percent of your projects bring in 80 percent of your revenue; 20 percent of employees do 80 percent of the work, etc.

 

When your company suffers from a financial crisis, cut projects that are not immediately profitable. Focus on getting rid of the 80 percent of non-income producing projects. You will also have to cut projects that are potentially profitable but suck money out of your budget.

 

Cut these money sucking projects without mercy because they have the potential to place a tombstone on your company’s grave. Even huge and wealthy companies (like Google) cut expenses to meet their goals. They shut down billion-dollar projects to save dozens of billions. Do not hesitate to take action!

 

  1. Prioritize projects that generate revenue

 

After taking action to eliminate unnecessary projects and employees, it’s time for you to optimize what you still have at your disposal. Only the best employees and the most important projects should be in your focus.

 

Increase your company’s efficiency by investing all of your resources into projects that generate revenue now. Positive Cash Flow projects keep your business afloat. Pay special attention to them and delegate your best experts to work on them.

 

Consider the success story of Steve Jobs’ work to turn about around after the company was stagnating with products that were not increasing revenue or making any profits. Jobs prioritized the development of the iPod, the necessary operating system and the ITunes store. Jobs singular focus turned Apple into the company it is now.

 

Always remember: Cut projects and people that are not moving you forward and prioritize projects that do.

 

  1. Cope with problems and always learn from them

 

Winston Churchill said, “Never let a good crisis go to waste.” Any crisis or problem is your best opportunity to analyze and learn how to improve your business. Don’t miss the opportunity to learn from your problems.

 

You can cope with problems (huge expenses, unprofitable projects, non-productive employees), but, first, you must break out of your comfort zone. The better business owner you become (which happens by surviving times of crisis), the higher chance your company has to reach its full potential.

 

First, learn to control yourself. A boss who is quick on the trigger and yells at his team when everything falls apart is not a pleasant person to work with on a daily basis. You will have to become a better, wiser person and constantly learn for each and every day. Pacify your anger and direct your emotions into problem-solving, not destruction.

 

Second, you will have to learn to think strategically and proactively. Get hyper focused and eliminate reactive thinking from your management style. Focus your attention to what actually matters and turn yourself into a true leader who controls circumstances, not yields under pressure.

 

Third, learn to be flexible and adaptable. Life is always changing and you never know what life has in store for you. When the unexpected happens, rethink your plan and move forward. Keep your eyes open and don’t stick to old strategies that no longer work.

 

Dealing with a crisis is never easy, especially when you are pressed for resources. Don’t let the lack of resources become your excuse, however become more resourceful and utilize your problem-solving skills to take your company to the next level. Remember, you must get started and gain momentum to kill the fear or solve your problems.

 

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