It was Friday morning on March 20th, exactly one week after Trump’s Europe travel ban when into effect. The world was reeling under the weight of the burgeoning coronavirus pandemic. As I was starting work for the day, an email from a dear friend hit my inbox.
The subject was, “Do I have a business?”
My friend was in the process of launching her brand new strategic growth and marketing company serving founder-led businesses. Just weeks before, she was adding clients and brimming with enthusiasm. It wasn’t her first rodeo. She had already started and sold an incredibly successful business. She knew starting a business was hard work.
However, after losing four key clients in a single week, and watching each of them cancel events, lay off employees, and grieve all that 2020 should’ve held, she wrote
I don’t know if I have a business anymore, but I think that’s the feeling most small business owners have right now.
If you are wondering the same thing about your business, I hope this article helps you clearly navigate what is likely to be some very difficult decisions for you and your new business.
If you haven’t started your new business yet, but you are considering it, I believe you’ll find this article incredibly helpful as well.
I’m going to be painfully honest with you because if you choose to proceed, you need to know what you’ll be facing. Before that, though, you could probably use a little hope right now.
It’s not necessarily over
What do Uber, Airbnb, Slack, Warby Parker, and Venmo all have in common? Every one of them started between 2007 and 2009 in the wake of the Great Recession.
The Great Recession was no isolated case. Many of today’s top brands have formed their roots under challenging times. HP started in the 1937-1938 recession, Hyatt Hotels in the 1957-1958 recession, Microsoft in the 1973-1975 recession.
In times of crisis, all the dials on entrepreneurial activity get turned up to 11. The risk is higher than ever, but in many ways, so are the rewards. The market is turbulent, creating an incredible opportunity for those who are willing to take risks and skillfully navigate the many challenges between them and a viable business.
If you can beat the odds, if you can build a viable business in times like these, it will infuse a virtually unstoppable resilience into your organization’s DNA. The extreme challenge of those recessions is the very environment that created the greatness in each of the impressive enterprises listed above.
Further, many existing players in the market go into a self-protective mode as they try to shed as much risk as possible. They have too much to lose, and they know it, so they sit back and try to quietly ride out the storm, leaving an open door for disruption in the market.
However, if you can find your profitable, sustainable market while the total market is bottoming out, you can ride the rising tide back to the top hitting double and triple-digit growth year after year.
We must start by recognizing the brutal reality
Ok, now it’s time for the painful truth.
Most businesses fail
The vast, vast majority (about 80%) of new businesses started in good economies fail. That means you’ve got a 1 in 5 shot of making it in the best of economic times. In an economy like we are experiencing right now, it’s more like 1 in 10; maybe even 1 in 20 businesses will ever make it to viability.
Most people should not start their own business
In times of economic crisis, we see the number of new startups skyrocket. Hundreds of thousands (and in this crisis, millions) of employees lose their jobs. Uncertainty wreaks havoc on those who are left. Those who’ve been considering starting a new business wonder if now is the time to take the leap? Others who can’t find work may believe it is their only option.
Unfortunately, as in many cases, people who simply should not start their own business (often Processors and Synergists) do. Then fail because they simply don’t have the make-up necessary to withstand the brutal existence that is the reality of business in Early Struggle in an economic downturn.
Cash is scarce
Cash is the lifeblood of a startup, and in a recession, it is a rare commodity.
Your bank accounts have probably taken a hit. Most investors aren’t going to take the risk of a startup right now. Bank lending is tightening rapidly. PPP and EIDL loans (if you even qualified) simply aren’t enough for you to outlast the downturn.
Even more importantly, consumer spending is incredibly low. Regardless of whether you are B2C or B2B, you’ve got an uphill battle to get customers to part with their dollars.
This is far from over
The truth is there is only one way out of a pandemic like this: population immunity, which happens only in two ways.
- Enough people get sick and recover and gain natural immunity.
- A vaccine is developed and widely distributed.
That means it is at least 6-12 months before any real sense of normalcy can return (even without the media hype, you can see proof of this in the continuous rise in cases across the country even with a degree of social distancing).
And that’s just the start. Your business has 3-5 years of struggle ahead of it before any sense of consistency and stability can take root.
So, what do you do?
I’ve personally counseled dozens of aspiring founders and new business owners as they try to get their new businesses off the ground in these unprecedented times. Here’s what I’ve been telling them.
You basically have three options.
1. End the business/Don’t even start
As much as it pains me to say it, starting the business may have been a mistake. If you are not willing to endure five years of trouble, exhaust all of your existing cash, and work tirelessly for long and seemingly fruitless hours. Stop now.
As difficult as this may be to hear, it is even more challenging to do. To give up on a dream is about as anti-American as it gets. We are born dreaming and taught to follow those dreams even before we know how to walk.
I promise you this, choosing on your terms to give up on the dream now, is far less painful than being forced to do it 3, 6, or even 36 months from now. If you decide to wait until then, you will have burned through a mountain of cash and lost precious time that you will never get back.
DO NOT start a business if it is your only option. It will not work. While it may not seem like there isn’t any other way, I promise you; there is always another way. Before you start, you need to find at least one other valid option, preferably two.
Prove you are willing to work relentlessly for your new business by working relentlessly BEFORE your new business.
[bctt tweet=”Prove you are willing to work relentlessly for your new business by working relentlessly BEFORE your new business.” username=”8figurefocus”]
2. Wait
Postponing doesn’t mean you are giving up on your business dreams. There will be new opportunities down the road in times that are far more conducive to your success. If you currently have a job, keep it. Start working nights and weekends to develop your product or service and also your sales and marketing.
Now is a great time to invest time in your future go-to-market strategy.
Waiting is the option, my friend that I mentioned before, wisely chose for her new venture. I’m so impressed by her foresight and discipline to make that difficult decision so quickly.
3. Ignore my advice and get started anyway
Even now, despite those 1,300 words I wrote trying to talk you out of it, many of you are going to plow ahead. You are a Visionary, that’s what you do. Please believe me when I say this: I am with you, I am rooting for you, and very few things make me smile like seeing a new business owner succeed and prove me wrong!
If this is you, here’s what you need to do.
Recognize your old product idea is dead
For many more mature businesses, I offer the opposite advice, but for you, it is time to go back to a blank slate.
You need to look at what you can do to add value to your desired market right now. How is this pandemic hurting your client the most? What can you draw from your expertise to help them out?
While everyone else is looking at their pain points, you can go on the offensive and help your customers with their pain points. Tackle the risk for them. Rise above the circumstances on their behalf.
Be scrappy
Your distinct advantage right now is nimbleness. You can turn faster than anyone else. Use that to your advantage. Even better, use it to your customer’s benefit. Offer them the agility that they lack.
To really be scrappy. You’ve got to be all in. Things aren’t going to be perfect. They probably won’t even be pretty. What is essential right now is that you show up every day with unrivaled tenacity. Operators do this better than any of the other three styles. If you’re an Operator, you’re in high demand. If you’re not an Operator, you need to hire one or turn your focus on operating.
Keep your eyes and ears open to opportunity because it will turn up in some of the strangest places. If you’re going to make it, you will have to be able to spot and capture these opportunities very quickly.
Focus on engagement over sales to start
Engagement is one of those incredibly tricky areas. Businesses in Early Struggle need to generate sales as quickly as possible. However, acquiring new paying customers is extremely difficult right now. What is possible is getting your prospective customers to engage. Give away as much as you can for free. Pay it forward. Use it to start a conversation that will yield its fruit in time, but be patient.
This is the long game. There are no easy wins here, and it is tough to know if it is working. To an extent, you bet on the horse before the races start and then hang on for dear life.
If you invest now when everyone else is trying to protect themselves, it will pay dividends when things start to open back up! The key will be catching those pivotal moments when individual clients (or customers) are ready for a transaction. Right now, these moments are hard to predict and fleeting when they happen. That’s why it is crucial to be highly attentive to each customer as you are communicating with them.
Build a sales and marketing machine
Most entrepreneurs I speak to have spent a lot of time thinking about and building their product or service. While this is necessary to an extent, now more than ever, new businesses (even pre-launch businesses) need to be focusing at least 50% of their time marketing and selling and building a system for marketing and selling, and maybe even more.
If you don’t spend 50% of your time on marketing and sales:
- You won’t drive the kind of engagement you need
- You won’t know when your clients are ready to buy
- You will have no way of stress-testing the market viability of your product or service
- You will be out of touch with the current realities your clients are experiencing at the ground level
- You won’t have the sales momentum you need once things come back online in your market
- You’ll get a couple of sales at some point then get stuck in the Artisan Trap
Find more support than you think you need
This road is physically, mentally, and emotionally exhausting. The maverick, lone-ranger stereotype of founders, is a farce. Don’t fall prey to the trap that you can do this alone, especially in times like these. You will need support both from inside and outside of your organization. If you’re married, your spouse has to be 100% on board. You need to find a community of fellow business leaders. You may even need a coach who can help you through the darkest days and challenging times.
How are you going to move forward?
These are incredibly challenging times for new businesses. Right now, there is an immense physical, emotional, and psychological toll for those who wish to play the game. For those who can beat the extreme odds and weather the storm, there is an incredible opportunity to build an enduring organization. I hope this article has served to help you understand what is at stake, to recognize what options you do have so that you can make the best decision for you!
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Stage 1: Early Struggle