Sometimes negative growth happens because of a larger problem in the industry or in the economy. Warren Buffett says, “only when the tide goes out can you see who was swimming naked.” This quote is apropos to negative growth in business. The economic fallout related to the coronavirus pandemic exemplifies the truth of the quote.
When economic setbacks lead to a downturn in business, companies that have built a foundation of long-term growth can survive. Those that have benefited from trends and never spent time building up the five pillars of business often drown. Within the first months of the pandemic, huge retailed giants that seemed stable falter before much smaller businesses.
The best of business owners cannot control the economy, but they can prepare for it. In times of plenty, build up a savings of nine to twelve months of capital. Many businesses are one or two payroll cycles away from insolvency. Businesses that build up a reserve of emergency funds will have the freedom to make choices for long-term success while counterparts are stuck making sink or swim decisions.
Business owners must lead by example in times of crisis. Regardless of how much money is in the bank account, a business owner must stop and think to make the best decisions. Employees notice economic problems, and they value reliable employment in times of crisis. Employees who can imply by the business owner’s actions that there is a problem may be quick to quit their jobs.
At the start of the coronavirus pandemic, one of SYE founder Christopher Wick’s businesses had the potential to suffer. The B2B business serves hundreds of small businesses, the very ones that took a direct impact from lockdowns. Some in the industry folded in the first few months of the pandemic.
While Wick’s business was not immune to losses, he prepared his business for long-term growth. For years, Wick did the daily work it took to keep his business moving forward. That put him in a position to be able to stop and think before reacting to the crisis.
While there was potential for loss, there was also potential for an influx of business. Less foot traffic meant that more businesses would need digital resources. At a time when other businesses were cutting back, Wick responded to the pandemic by hiring new employees.
This primed his business to handle the influx of growth that did come, but it also did something even more important for morale. Hiring more employees made all existing team members certain that their jobs were safe. It showed the entire team that this particular business was not threatened by adversity. From the top down, the business was still focused on moving forward.
Negative growth is a problem that business owners can prepare for. Negative growth is not always a cause for concern. When negative growth becomes a trend, the same methods that helped the business to grow can be used to regain a pattern of positive growth.