These 5 little words helped my business to survive the 2020/21 crisis.
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I have one word of encouragement for you if you’re a business owner in the travel and tourism sector, or the events industry, or the restaurant industry, or in any of the countless other industries that have been adversely affected by this devastating crisis:
You have my admiration.
You deserve to be respected because you are playing this game on the hard mode.
I am also playing this game. Despite the fact that the last two years were not the best year for business, some aspects of my business improved. And some new habits appeared to be fruitful.
One is to compare how other entrepreneurs handled difficult situations. Something that is well described in this book. I wanted to emulate their success and learn from their mistakes.
Then I came across Scott Belsky, a successful company founder who talks about how to be a better entrepreneur. To this day, there are more than 10 million people on the platform he founded, Behance. In his speeches and book, he speaks about a very interesting axiom.
A single sentence, with five imperatives, sums this axiom:
Begin, Survive, Improve, Complete, and then, Replicate.
This led to him starting his own company, selling it for $150 million, and becoming Chief Product Officer of Adobe Systems Inc.
In this article, I show you how his ideas and those of other entrepreneurs helped my company and how it can help yours too.
What Does Business Survival Mean
Business survival is the ability of a business to develop, persist and grow in a competitive market environment. (Does “competitive” applies to the global situation in 2020 and 2021? Well…)
It refers to the capacity of a business to remain profitable, and thus continue to operate, despite economic or social changes that would otherwise negatively impact it.
Business survival is essential for businesses to have the resources they need to meet customer needs. They secure these resources by effectively responding to internal and external forces that challenge them. Business survival also means staying out of trouble with regulatory authorities and other stakeholders such as employees, customers, distributors, suppliers, and tax authorities.
The 5 imperatives described below may sound obvious at first. But understanding how important they are is crucial when facing both internal and external challenges at your company.
1 — Begin
To put it another way: don’t just sit around and see what happens! Create alternative scenarios if a crisis is imminent. Look for anti-fragility by following some of the things Nassim Taleb has told us about. Build strong measures (one of the essential things to consider before starting a business) and work to keep your money safe.
Every day you delay implementing your emergency plan is a day you lose working for your own survival. I waited for almost two weeks during the beginning of the Pandemic to see if the crisis would just go away on its own. As soon as I found out that it was going to be a long-term and serious problem, I turned to my plan for damage control.
Someone told me I was overreacting. That by summer, everything would be fine. I thought he was right at first, but weeks later I had changed my mind, and he was still being too optimistic. His business is now closed for good.
Take immediate action to minimize the damage. It’s not a bad idea to think about the worst-case scenario and make systems that can handle it if it does.
It’s important to remember that extreme events, in the short term, aren’t impossible but aren’t probable either.
BUT, in the long run, these events become more likely due to the probabilities summing up. When they happen, it pays to be ready for them.
Taking action is the only way forward.
As an example, the first thing that I did was to make sure that our money was safe. So I canceled investments in new rooms (since demand would be low in the coming months) and renegotiated contracts with suppliers.
I even got a rent cut, and without it, we wouldn’t be able to survive. It’s a good idea to try and get a better deal from suppliers when things go wrong, because they may be more understanding. This is what makes up a good business relationship, as you can see.
2 — Survive
After you took action and started planning and calculating for your success and sustainability afterward, the next step is to fight. Hard work awaits. The longer the crisis lasts, the more likely it will be to give up, if you are not strong enough or if you forget your purpose.
One thing that makes people give up is to rely too much on their hopes. This is especially dangerous when dealing with an extraordinary crisis like the pandemic.
How many times in 2020 did I hear people say things like:
“We’re getting ready for a great summer! Everyone’s problems will be solved by X, and the virus will just be a ghost from the past.”
It was summer at first. Then Halloween came, then New Year’s Eve, then the entire 2021, and still things are not back to normality (at least economically speaking). Relying on wishful thinking too much can lead to disappointment. My plan? Prepare for the worst. That opens the door to good surprises.
People who stay strong through hard times are the winners. I don’t think this crisis is just a 100-meter race. It’s a marathon or even an Iron-Man. You need to keep your cash reserves safe, keep your costs in check, and keep moving forward. Look for people who can help you, whether it’s with your suppliers or your business. To go through a hard time with the help of people who are in the same situation is much easier. You can also share ideas and solutions, which can help you work better together.
3 — Improve
Good crops contribute to food waste. That’s the same thing that happens when there are years of a steady economy and a lot of demand for goods and services. A crisis should be a motivator for cutting down on waste and making things more efficient.
How did I make my business better during the crisis? One thing we did turn out to save us a lot of money each month. In place of having a company that hired full-time drivers to drive our customers to and from the airport, we signed a deal with a ride-sharing app instead. This simple step reduced guest transfer costs by 57%!
We also made changes to the contracts we have with our suppliers. Because the Digital Marketing agency that manages our websites used to charge us a monthly fee, we changed our contract to one that was based on how well our websites ranked. Now, we only pay if the performance of their service is on par with our expectations.
All of these business survival strategies together reduced our costs significantly. Enough to the point that in 2021, we already recovered part of the losses from 2020.
4 and 5 — Complete, and then, Replicate
You began and executed your contingency plans. This is how it works: Your business went into damage-control mode to keep its cash reserves safe. You’ve already accomplished more than most of your competitors. You made your processes, your costs, and your contracts more efficient and cheaper.
What comes after that? There are two ways to go:
1st: The crisis isn’t over yet. It’s time to look for lower expenses and protect your business’s cash flow at all costs. Most of the time, people don’t think about how far they can go with this kind of protection.
It was during the great Brazilian crisis of 2015 that my parents did something that I saw before. They delayed the payment of bills that had low-interest rates until later and paid bills that had higher rates right away. My business never came to this point, but if the crisis got worse, I was ready for that.
2nd — The crisis ends. In the future, the sun will shine again, and there will be a bright future. Less competition means more demand for the survivors to recoup their losses. But your biggest advantage here is all the things, all the business survival strategies, you’ve done to make it through the hard times.
Conclusion: The Imperative of All Business Survival Strategies
A couple of changes that you did will help your business. The contracts you renegotiated, the better conditions you established with suppliers, the new processes you set up, and the more efficient systems will all help your business grow.
You came up with a way to do it. It looks like you changed. You were able to get through. That is how to win.
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Levi Borba is the founder of expatriateconsultancy.com, creator of the channel Small Business Hacks and The Expat, and a best-selling author. Subscribe to my articles (for free) and receive (also for free) the ebook “The Blueprint for First-Time Business Owners”.