There are wins and losses, successes and failures, ups, downs, and in-betweens. It can be easy to keep your motivation and energy levels high when things are going well for the business. But if something goes wrong, what helps you get back on the horse?
The reality is that some of the setbacks might be within your control, and some of them might not. Regardless of the circumstances, how you deal with those setbacks can determine whether your business thrives in the weeks, months and years following the setback.
First things first: the best time to think about setting a strategy for downturns and setbacks is when things are great. Sounds counterintuitive, right? You're on a roll and things are looking up; why should you spend hours thinking about tough times?
However, when things are going well, you can take a few simple steps to ensure you've got a Plan B if things fall apart tomorrow. For example, when your business is going well, get into the habit of putting a bit of extra money aside into a contingency fund. This gives you a bit of extra cashflow to pay for inventory, bills, salaries, and marketing in the event of a downturn. You're in the best position to make these arrangements when things are going well.
Here are a couple of tips and tricks we've seen over the years. You can use these as a starting point to discover what works best for you.
Learn from experience
Try thinking about the setback in terms of insuring yourself against a similar thing happening in the future.
Experiencing a setback isn't the worst thing that could happen to you. But finding yourself in the same situation a few months down the track may mean that you haven't learnt from the experience. An important part of learning is reflecting on past experiences. This goes deeper than superficial statements, such as, “I could have done better” or “at least I'll know for next time.”
Effective reflection can be uncomfortable at times, especially if you feel that something was your fault. At the end of the day, being honest with yourself gives you the ability to learn from the experience and make improvements.
Some guidelines for effective reflection include:
- Recount the experience Start with anything that comes to mind. It often helps to write, speak or draw the situation, giving you a different perspective on your own account of what took place. - Think critically What did you do well? How could you avoid certain outcomes in the future? What steps could you take to achieve a better outcome next time? - Seek constructive feedback Ask other people who were involved what they think about the experience. Perhaps they're reflecting on things that haven't occurred to you yet! - Make an action plan How will you take these reflective insights and turn them into something actionable? What will you start doing tomorrow? What will you start doing next week? What will you roll out next month or next quarter?
Avoid catastrophising
When one thing goes wrong, it's easy to build it up as 'catastrophic'; seeing the absolute worst in the situation, and in some cases, building it up to be worse than it actually is. Psychologists call this phenomenon 'catastrophising', which describes the process of negative thoughts spiralling out of control. “What if I'm not good enough to be an entrepreneur? I was destined to fail. I'll never be successful!”
If you find yourself in this cycle, it's important to get professional support early and find ways to break the cycle. Once you're aware of your thoughts, try to rationalise them. For example, you may be telling yourself that you were destined to fail, but let's be honest: is it realistic that an entrepreneur experiences success at the first hurdle and then never faces a single setback? Of course not! By proactively challenging your negative thinking, you give yourself the best chance of realising that the circumstances don't make you a failure; it's simply an inevitable hurdle that most entrepreneurs will have to face at some stage.
Get smart and strategic with support networks
One of the best ways to prepare yourself for a setback is to make sure you've got a strategic support network in place. While family and friends can be fantastic support, you'll want to be in close contact with other business owners who can sympathise with your dilemma.
The great thing about joining groups or forming professional relationships is that they are mutually beneficial. Every business owner has a unique experience of setting up, owning and operating their business, and sharing those experiences can help other business owners avoid making similar mistakes.
Networking doesn't come naturally to everyone, and it can sometimes be an uncomfortable experience. If you're having trouble reaching out and making contact with other business owners (because let's face it, it can be nerve-racking), start by joining existing groups and communities that bring together people in your industry.
This may take the form of Facebook Groups, or you may be able to attend local events and conferences featuring expert speakers in your field. This will give you an opportunity to interact with other business owners in a comfortable setting and can be a great way to warm yourself up to the process of networking.
Never too late to learn
We aren't talking about cheesy inspirational videos on YouTube.
Real inspiration demands time and energy. You may even need to take a holiday to clear your thoughts and gain perspective. Time away from the business can give you the clarity of thought needed to see where the team's skills may be lacking. This gives you an opportunity to plan out learning and development for the following year, encouraging yourself and your team to step up and build new skills and create new opportunities within the business.
Mind mapping is a great way to organise your thoughts and kickstart the process. You can do this digitally, or simply grab a sheet of paper and jot down your ideas. Keep referring to this sheet over the next few weeks, and add to it as new thoughts occur to you. Once you've got all of your ideas on a page, you can begin to refine and prioritise what you'll work on first.
It is also important to subscribe to emails, magazines, blogs, and websites from industry experts. This will allow you to keep your finger on the pulse, and be inspired by people who are testing new ideas in the market. You'd be surprised how inspiring case studies from your competitors can be in terms of helping you analyse the market and decide how to optimise your product or service for your niche.
Summary
We know it's easier said than done, but don't let setbacks get you down. It's a normal part of every entrepreneur's journey. Plan ahead and have your strategy in place when a downturn strikes; reflect and learn from the experience, avoid negative thinking and stay inspired. Armed with a strong support network and a small contingency fund, you'll be giving yourself some extra breathing space as you plan your next steps.
If you're already experiencing a cashflow crunch and need expert support, don't hesitate to get in touch with the team of lending experts at Valiant. Give us a call on 1300 780 568 and help us learn more about your business.
Alex is the co-founder and CEO of Valiant Finance. He brings a wealth of experience from his time as a banking consultant at McKinsey, and has a background in Business and Law.
Related Posts
A successful finance application starts with a healthy credit score. Click for seven practical tips to improve yours today.
Does working remotely work? The stats are in! Here’s how our idea of work-life balance has changed, and whether it will stick.
Finances hit hard by Covid? Click to learn more about hitting pause on your mortgage repayments, and other ways to relieve financial pressure.
Who saw 2020 turning out like this? No one. But that can only damper our spirits for so long.
COVID forcing you to rethink your business model? Here are five practical steps you can take to cope with new challenges and changing needs.
While no one planned for COVID-19, there’s a plan in place to keep SMEs afloat. Here's what you need to know.
A minor setback can be challenging, but there's no reason to let it derail your business goals. Here are a couple of coping strategies to keep you moving.
Put your best foot forward by preparing strong answers to these 4 questions.
A little preparation goes a long way. Get ahead on the finance front with our quick tips to help you with the 3 key areas of your loan application.
Cut through the confusion. There's so much talk around credit scores and what they mean; it can be hard to seperate fact from fiction.
The time arrives in most small businesses when you’re required to borrow money. So, how do you get 'business finance ready'?
We sat down with Neil Slonim, The Bank Doctor, to find out what he thinks about Australia's fast-growing online SME lending market.
Finding the right business loan doesn’t have to be difficult. See how we helped Mark’s Wholesale Steel Business find the right business loan for them.
How do you attract new customers to your business? Where do loyal customers come from? It all starts with your SMB online strategy.
The path from personal trainer to business owner can be both challenging and rewarding. Check out our top tips for making the transition.
Want to reach your customers online? Are you ready to digitise your small business? First up: get smart about social.
Don't let angry customers stay angry. Protect your business' reputation with these simple tips and tricks for delivering exemplary customer service.
Every business is unique. Every business loan is different. What features are most important to you? Consider these 4 things before applying for finance.
Have you explored your trade finance options? Premiering your business on the world stage may be within reach.
Your guide to smart inventory management for every season.
Get more customers and keep them. Here's the low-down on setting up your very own customer loyalty program.
You've explored your business finance options. What do you do next? How can you be sure you're comparing loans effectively and getting the best deal?
Want to expand your team but don't know where to start? Here's our guide to hiring great employees, featuring tips from industry leaders.
A Unique Selling Proposition (USP) is fundamental for any business looking to grow. Learn how to develop your USP and stand out from the crowd.
Are you invoicing your B2B customers with longer payment terms? Is it hurting your cash flow? Debtor finance could be a lifesaver between payments.
With so many business finance options to choose from, how do you know whether working capital is right for your business? Start by reading this.
2018 is your year. Here are 7 quick tips and tricks to get back in the driver's seat when it comes to battling business debt.
Are you ready to refinance? Reviewing your business loan every 2 - 3 years can save your SME a lot of money. Here's what you need to know.
Improve your chances of locking down the perfect business loan. Here are 19 business funding mistakes to avoid when you're applying for commercial finance.
Setting up a business is hard enough, without getting stung with unexpected costs. Here are the things you should be thinking about before you dive in.
Getting the best rate is all about asking the right questions. Have you done your research? Here's where to start and why.
"Ok, I'm eligible for the R&D tax incentive. But how do I actually claim it?" Here's what you need to know.
You could be missing out on a tax offset of 45 cents in every dollar. Check your eligibility for the R&D tax incentive today.
Need to raise cash for your business? We explore the use of debt versus equity, and how to decide which one is best for your business.
Reward points can add value to your business, but it's not one-size-fits all. Here's what you need to know.
Here's the million dollar question: will you start up a company or will you establish yourself as a sole trader? Get the full story.
Valiant Finance is a small business dedicated to supercharging the growth of other small businesses through access to funding. Here's what we've learned.