It was 2008, I had just moved into a shiny new office, and was attracting blue-chip, Fortune 500 clients. After several years of success due in part to a fab profile in O magazine, things were only looking up for me and the business. I had recently purchased a home, was in the middle of fun renovations, and planning for the next phase of my business. I couldn’t have been happier.
And then the recession hit. At first, we weren’t hit at all. Not even a little. The business actually started to expand, as the type of marketing I did was much cheaper than big, traditional advertising buys.
And then our clients stopped paying their bills. Just like that. Invoices were getting pushed by 30, 60, and in some cases 90 to 120 days, if not permanently deferred. I went from flourishing to near failure in a matter of days.
It’s a feeling so many of you can probably relate to given the events of this year. One minute, you feel like the sky’s the limit, and there’s nothing stopping your business. Then, out of the blue, an earthquake hits that shakes the very foundation of everything you’ve built – personally and professionally. The events of 2008 taught me something incredibly important.
Massive challenges will hit your business every few years, so plan for them.
I’m sure you’re thinking “there’s no way we could have planned for the events of 2020. This is totally unexpected.” But so were the events of 2008. As entrepreneurs and wantrepreneurs, we have to plan for the challenges we can’t currently see. So how do we do it? By giving our business a good old fashioned physical.
You can use this worksheet to help you figure out how you’re doing in every area of your business, to help you figure out which areas of the business are in the worst condition. It’s important to do this because once you know your areas of crisis, you can react.
Knowledge is not only power, knowledge empowers.
Once I identified the cash flow issue in my business, as well as the clients who weren’t paying, I had some conversations with them to figure out what the issue was. In many cases, the clients had no clue their processing departments weren’t paying our bills. Those companies were just as panicked as I was about cash flow, and had instituted across the board policies to reserve cash.
But there was a bright light for my business. We were a registered small business, and as such, with one click of the button, our billing terms went back to a more workable payment schedule. And an added bonus of digging into my billing was the discovery that clients were hiring us more for a service I wasn’t really promoting. More on that another day.
The key is to get back to basics.
There are 12 key questions every business owner should ask themselves. I learned these questions while I was studying at the Wharton School at the University of Pennsylvania and then taught them to over 1000 students as the Academic Director of Leadership in the Business World for many years at Penn. I ask myself these questions constantly to maintain the health of my businesses. They’re even more important when your business is in crisis. Use this worksheet as a guide, because you need to move from a place of trying to survive to the zone where you thrive.