Times will get worse so we need to be mentally prepared
Times are tough and we’re all sailing on sight. The current circumstances are very hard and people are struggling. I know that things are bad and I know that things are worsening faster than the media portrays.
I know this because I’ve experienced it firsthand.
Last Friday I needed to speak with my financial advisor because of a tax issue. Normally his assistant would send me through within a heartbeat but not this time. No, this time was different.
When she picked up the phone I heard a frantic voice tell me that my advisor was too busy to deal with my tax matters. This was strange I thought… So I got very curious. What could be going on up there?
I pushed through by telling her that my matters were urgent too. Since I kept on trying to speak to my advisor, she explained to me that they were busy with bankrupcies and that those bankruptcies were piling up as we spoke.
Holy shit I thought! My financial advisor was too busy because he was dealing with an overflow in bankruptcies? For me this was unprecedented. In the 6 years that I’ve been in business, I never heard anything like this.
I was still a child when the last financial crisis hit the globe so I have no clear ‘oh shit’ moment from back then. But now, the moment I hang up the phone, I just knew we were in deep sh#t.
Yup, it’s real and were both in it. You and me. All of us. We’re all in this boat together. We entrepreneurs will all face the tough challenges ahead. No escaping from it. Brace yourself since this is going to be a time where you’ll get a lot of punches in the face.
This post has the purpose of bringing some clarity amidst the chaos. Below I’m giving you a single question that I learned from a professional crisis manager. He told me that the most important question to ask yourself in times like these is:
What is the next step?
Now read on and make the best of it. The people that work for you and the families behind them expect it from you. You need to be brave.
The question: What is the next step?
I once heard a very intelligent man say:
Both small and large fires are caused by the same bolt of lightning.
James G. Rickards
I interpret this saying as follows: A single event can be the trigger or catalyst for a much larger event. Its how earthquakes can lead to tsunamis and flaps from a butterflies wing can lead to a hurricane in Florida.
One simple step has the genetic energy off all steps and outcomes behind it.
The thing is that you need to start making those steps. Without a trigger, nothing will happen and your business will fail.
It’s the same with physics. If something isn’t being pushed forward by an external force, it will come to a halt.
You need to force this trigger in your business by focussing on the right question. You need to compound as many single and small events as possible the get that forest fire going.
So it’s important to ask yourself: What is my next step?
As an entrepreneur, the stress of crisis times can be unbearable. You’re out there by yourself and I get it. I’ve been there. When times are tough you just don’t know how to get through all of it. I know how this feels and I have shed my fair share of tears.
But you can get thought it. And the key is to make your life and the decisions you make very small.
Just ask yourself: what is my next step?
Going even further. What is the single thing that you can do right now that will increase your chances of surviving this crisis? What is that single step that you can take right now to increase your money inflow or te decrease your spending?
Don’t think about a cascade of steps. Don’t make it too complicated. You don’t have the time to make a McKinsey level decision tree based on 900 input values and robust assumptions. You need to move NOW.
Also, the road that you think you’ll take will look way different once you’re there. That is the nature of a crisis situation. In a crisis, it’s about making your world small and comprehensible. For yourself and others.
So think about it right now: What is the next step for you?
How to use this question in your business?
Let’s make this vague concept practical by giving you an example from my own business.
In the Netherlands (where our Business: Parkeagle is located) it’s mandatory for employers to grant your employees vacation pay in the month of May.
Most of the businesses need to do so by law and honestly, I think its a good thing. People use the money to pay off debt or to maybe go on a vacation they desperately needed. I’m pro vacation pay.
But this payment is around 8% of the total yearly salary of an employee.
It’s basically a full month of extra pay. This means that in the month of May I’ll have to pay 2x the amount of salaries I normally do. This extra cost burden come in a period when less income than normal is coming in.
What I’m trying to say here is that I’m flying on sight and that my sight is telling me that I might be facing a short term liquidity problem if I have to pay out the extra vacation fee in May.
This liquidity problem will result in my business potentially going bankrupt which means that every one of my 8 employees is out of a job. That is just plain bad for everyone. Including the families that depend on my guys at the office to bring in their wages.
So again. In this situation, I need to make the situation very small.
I start by analysing the situation:
- I will not be able to pay vacation wages in the month of May.
- Am I still able to pay normal wages? YES.
- Are my employees currently expecting vacation pay? YES.
- Will the business fail if I pay out vacation wages? YES.
- So what is the next step based on the above answers?
After you’ve analysed the situation and you ask yourself, what is the next step, the next step becomes pretty obvious:
I need to talk to my guys and explain the situation that the business is facing and I need to communicate clearly that vacation pay will have to wait if we want to survive as a business. Besides that I will need to give everyone the opportunity to speak their minds.
So my next step is to communicate with my team about the circumstances that we’re in. Bringing bad news is always hard but it’s better to do it early than too late. So the first step is open communication.
This is the power if the ‘next step’ question. There is always a next step. Most of the times in crisis you just need to think in the next steps.
So again, for the above situation, what is the next step after that?
Well, some of the guys told me that they were waiting for the money since they have to pay off debts. Okay, this is new information. What is my next step based on this new information since I don’t have the money to pay these guys? The obvious next step is to find out how much they owe and to ask them if I can communicate with the lender to come to an agreement with them. Maybe talk to the lender for my employee and try to help them get some leniency.
If that fails, there is always a next step. The beauty of the next step principle is that you will never fail. Every step is just another try at going in the right direction.
Finally, this might help to illuminate the concept:
‘What is the next step’ is basically another way of saying: what problem do I need to address right now to move forward and go into the direction that I need to go in. Because that is what crisis management is. Tackle the most important problems one by one.
And as an entrepreneur and business owner, this is your job at during a crisis.
How to implement this way of working?
You need clarity and thinking space to be effective when using the ‘what is my next step’ method.
You can only get thinking space by cutting out the fluff for the coming days.
STEP ONE: is to get out your agenda and take a hard look at everything that you have planned for the coming days.
Which of the things in the coming 5 days are not linked to one of the following first principles for business survival and ask yourself the following questions:
- Will this meeting bring in any new business?
- Is the meeting with a potential customer, financier/lender/investor or supplier?
- Can this meeting lead to short term income in the form of orders, loans etc?
If the answers are NO or partially yes, you shouldn’t waste your time. Please please please focus on the most essential things. The rest is fluff.
Sidenote: Who gives a shit about forging partnerships during a crisis. Partnerships are for losers during the crisis. Its everyone for themselves. Do you really think all those larger corporations care a dime about you? They need to keep their own heads afloat so please focus on the essentials. And that is the survivability of your business.
The coming hours, days and weeks should be about one thing only: how will you survive this horrible situation.
So clearing your calendar of all the fluff is the start.
Now take a step back and look at your business.
STEP TWO: You need to know how much money is coming in and how much money has to go out. There will be an imbalance somewhere. And during crisis times there always is. Maybe your clients are not paying or you don’t have any new sales coming in while you still have to pay your employees and your office bills. There is always something out of balance.
Find out what it is.
This imbalance will be your starting point. Re-aligning this imbalance for the short term is your main objective here. You need to make sure cash-out is equal to cash-in.
For example, you’re having a customer that isn’t paying you on time or they are holding payment off entirely? Okay, what is the next step from a first principle perspective?
You need the customer to pay you for the work that you’ve done so your next step should be to get that customer to pay you. Or to at least come up with a solution for the lack of payment.
Call the customer now and if they don’t pick up, call them again. Also, email them now and send them a text. Heck even call them at home. Who cares, its a crisis. Now is not the time to be afraid to go after your money.
You need to be able to feed your people. That is the only thing that counts at this moment in time.
So get on the phone and tackle the first step.
Once you’ve done that, go look at the situation again. What is the next step now? You didn’t get in contact with the customer, okay go on to the next one. And the next one.
Ran out of customers to call, okay, fair enough. Now call all your local banks and tell them that you need a bridging loan and explain to them why your business is solid.
What is the next step after that gives you nothing to work with? Call your rich uncle and ask if he has any investor friends that want to get into your business for cheap.
You see, there is always the next step. As long as you have the energy to go for the next step, there will always be a next step to pursue.
Just take it one step at a time and you will get the job done.
I know I’m reflecting reality like its very simple and I know that in real life it’s never this simple. But my point here is to show you that there is always a next step to take. And once you’ve finished that first step, there’s always another next step.
And so you should just keep on grinding and get thought this.
Let’s sum it up
Times are going to get worse before they become better. We need to be ready for this. We need to be hardened and sharp.
But you can only be sharp when you’re focusing.
Having a single question to guide you makes you extremely focussed.
With this ‘next step’ mentality, you’ll be able to wither the coming storm.
So clean your agenda and find out what first step you need to take to make your business a little bit more healthy in the short term. Remember, there always is a next step. You can’t fail at this.
Only by taking the next step will you beat this devil. Without taking any steps you will fall, trust me, I’ve been there.
Stay safe and sane guys and galls and brace yourselves, expect the worst and prepare for the worst, things can only get better when you do.