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?
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.
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.