The path to successful entrepreneurship has never been free of obstacles, with very few notable exceptions.Breaking new ground in the business world has always been risky, even in the best of times.After all, before you even tried your hand at it, someone else would have done it if your brilliant idea was simple to implement.
Naturally, we are not in the best of times right now, at least not yet.Particularly difficult have been the last few years.The struggle to keep their businesses’ lights on was immense for many business owners.Unable to weather the storm was a record number.Others were reluctant to join the fight.While the world dealt with pandemic-related shutdowns, travel restrictions, and personal losses, they put their entrepreneurial ideas on hold.
An ongoing economic downturn has many people becoming even more discouraged halfway through 2022.However, seasoned investors will all be quick to tell you that even (or perhaps especially) in difficult times, there are opportunities for success.The trick is to look where nobody else is looking for promising new services, products, or efficiencies.It could make all the difference to anticipate and prepare for these four challenges.
As the purchasing power of their money goes down, many otherwise savvy business people still make the mistake of pulling back on all their investments. While this can, at times, be the right call, much of the time, it kickstarts a scarcity mindset that precedes missing future opportunities.
Entrepreneurs facing a bear market or other obstacles to success must remain vigilant to guard themselves against any form of panic. After all, if the money in your accounts is progressively becoming less valuable, then hoarding it or waiting for better times can make little sense.
While appropriate caution is merited in any turbulent marketplace, inflationary times absolutely require entrepreneurs to shift how they perceive and approach everyday operations, current and those still on the drawing board. Look for places to evaluate and apply five essential practices.
Uncover and eliminate waste.
This should be your first priority. Nothing in your business should escape thorough reevaluation. For example, could you downsize office space by moving some of your employees to remote positions? Likewise, find ways to look at your on-site assets with new eyes. Start divvying up everything about your operation into “must-have” vs. “nice to have” buckets.
Make any needed repairs or anticipated upgrades ASAP.
Expect the cost of repairs to go up. Expect the cost of software and upgrades to go up. Move quickly where things have thus far been neglected. If you were going to do it “at some point,” consider if rising costs aren’t an impetus to do it now.
Solidify your key players.
The Great Resignation continues to rage worldwide. It’s time to ensure that your first-string employees are 100% on board and (significantly) that you check in with them regularly. If they’re unhappy, you need to find out why.
Lengthen the terms of your contracts.
For example, if you are in a stable, mutually beneficial relationship with any of your suppliers, ask them to extend the duration of their pricing. Similarly, seek to lock in your clients to long-term, agreed-upon amounts.
Grudgingly raise your prices.
This one is last on the list for a reason. Raising prices is often our knee-jerk reaction to rising costs. Frequently, moving immediately to increasing prices “blinds” entrepreneurs to eliminating waste or other cost-cutting measures.
2. Tightening Purse Strings
As mentioned above, many investors respond to rising costs and the shrinking value of their 401(k) and other assets by scaling down their willingness to put money into new ideas. While that response is understandable on many levels, entrepreneurs need to be prepared to encounter increased resistance as they seek to put funding into place.
Of course, it’s often difficult for entrepreneurs to break out of their established thought patterns long enough to ask themselves a few key questions. Yes, potential investors will exercise more caution in the face of inflation and stock market downturns. But that doesn’t necessarily mean that these are the primary reasons for their unwillingness to cut a check.
As you begin to hear “No, sorry,” especially from unexpected sources, invest in yourself by allocating fixed, distraction-free time to hone and further sharpen your entrepreneurial proposals. Step back from the hustle long enough to run a few essential diagnostics.
What is the real reason for the negative response?
When talking to potential investors, stress your desire to remain open to any positive or negative feedback they offer. Permitting people to move beyond “polite” refusals is essential. Otherwise, they may point to the downturn as a way for you to save face.
Could your proposal be modified to reduce the risk factors…even a little?
You might be asking people to put their money into something that seems too good to be true. Yes, you want to showcase your idea in a positive light, but you should also realistically assess and present risks to your investors. Can any of these be eliminated or at least minimized?
Is it time to seek new avenues for investment?
This can be as simple as searching online for interested parties or as relationally challenging as asking your unwilling investors to introduce you to others who might be interested. Obviously, some sharp diplomacy skills might be needed as you negotiate obtaining introductions.
3. Energy Costs
Everyone hopes that the global factors contributing to the soaring gas and electricity costs will reverse themselves. However, entrepreneurs and small business owners can’t launch new enterprises or product lines exclusively on hope. In the UK, for example, research indicates that nearly two-thirds of businesses allocate anywhere from 5% to 20% of their total operating budget to energy. Thin profit margins and rising energy costs can stop a company in its tracks.
Smaller companies will be hit hardest. If past performance is any indication, they will be the first forced to raise their prices. Larger companies are typically more willing and able to take the hit. Unfortunately, this combination adds up to smaller enterprises being less able to compete with corporate giants. However, all is not lost. A few simple coping measures may be all you need.
Do whatever you can to keep energy expenditures in check.
Turning off lights, installing energy-efficient appliances and setting policies on indoor climate control are great places to start, but don’t stop there. Many municipalities offer low-cost or free energy audits. They’re likely to spot waste you long ago accepted as normal. Maybe you limit delivery or shuttle services to twice a day rather than on demand. If you haven’t already, set and maintain a schedule for regular energy audits, regardless of changing economic conditions.
Beef up your sales and marketing efforts.
Rather than resorting to an automatic price increase, maybe this is the time to look into expanding your business into new geographic areas, launching new products, or investing in additional sales reps. Do what you can to optimize your products and services for nontraditional customers. Seek outside counsel as you look to broaden your appeal.
Commit to fighting the energy-conservation battle on multiple fronts.
Instead of simply passing on costs in the form of higher prices, many entrepreneurs add a line item on invoices that lists costs associated with electricity or gasoline use. The customer who costs your business more combined energy consumption should expect to pay a higher surcharge than those who do not. Using a separate line item will also enable you to keep your pricing the same, and it can help promote goodwill with clients.
4. Undetected Burnout
“Hey, how are you doing?” “Doing great, thanks.”
In light of what the last few years have done to everyone, this all-too-common hallway exchange should be banned. (It won’t be, of course.) However, far too many entrepreneurs are so preoccupied with their next pitch meeting that they allow themselves to think this sort of exchange passes as checking on someone else’s well-being. It’s not.
Everyone needs a team to get their ideas off the ground. Even your best employees or partners may be starting to fray at the edges and, worse, aren’t even aware of it. Successful entrepreneurs look hopefully to the finish line, but they also want to ensure that everyone on the team makes it there. The greatest successes are those that can be shared.
Start by slowing down your hallway moments long enough to ask better questions, and then — this is typically the hard part — stop in your tracks to await the response.
Here are a few simple questions you can commit to memory as you seek to foster improved employee morale. All of these are personal, so make sure your inquiries are authentic and 100% appropriate to the individual. Be willing to share your answer, too. Counter any sense that this is an inquisition or some other informal employee evaluation process.
How are you and yours managing the stress associated with our work?
Anything feeling weird or out of control?
How have your sleep and rest been lately?
Any misgivings about what we’re doing here?
Is there anything distracting you these days?
In the past few years, many of us have grown understandably weary of hearing the words “unprecedented” and “pivot.” I know I have. Nevertheless, the quick pace of global e-commerce has kept us in a constant state of readiness for change. As you navigate this new terrain, it will be vital to maintain a journal that will allow you to go back and see where you changed direction (wisely or otherwise).
Never let your entrepreneurial spirit be influenced by panic or a scarcity mindset. Maintaining a level head will benefit you, your employees, and your personal relationships despite the shifting ground beneath our feet. Best regards!