The economy is changing in dramatic and unexpected ways, and many of us are having a difficult time deciding how to react. Should we adopt a bunker mentality, or keep plugging ahead as if little has changed?
The fact is that entrepreneurs are well-suited to respond to the chaos, perhaps even to use it to our advantage, because we recognize that every challenge really presents a new opportunity. To anyone heading a startup, steeling yourself for the ups and downs of circumstances that are often largely out of your control is a daily ritual — even in good times. Sure, the credit markets are throwing us some new tricks now, but dealing with uncertainty is old hat for founders.
Call me an inveterate optimist. But with so much doom and gloom in the media, I’m offering four tips for maintaining a positive perspective through the current events. If prognosticators are right, we will live with these painful economic conditions for a while. Positivism is a discipline we all need to hone.1. Listen for substance. Vet for noise.
You’re going to get a lot of downtrodden talk, and head-shaking. Listen carefully to your employees, capital partners and industry experts. But train your ear. Vet at the same time. Your job as an entrepreneur is to drill down to the heart of matters. Is the fear and concern being voiced to you based on valuable information, or is it just negativity? If it is the former, respond. If it is the latter, vet and ignore.
2. Ring cash out of your contracts.
You must wring more bang out of every buck now. Vendors are uncertain, too. This is your chance to renegotiate everything: leases, open-ended vendor contracts, advertising rates, technology purchases, you name it. If you’ve been prudent and have a history of paying your bills on time, business partners will pay a premium to continue to do business with you. Economic uncertainty works in your favor here.
3. Pull a Buffett: Buy low.
I’m talking about human assets. Great people are now available. Such employees pay for themselves. A partner recently introduced me to a candidate for a big job we needed to fill. One conversation and I knew he was a great fit. Normally, I couldn’t have afforded him, and he probably wouldn’t have returned my call. But his phone isn’t ringing much lately. So I reshuffled our cash position to seize the opportunity. Warren Buffett would be proud that I borrowed a page from his playbook and “bought low.”
4. Offer people a reason to adapt.
People won’t change unless you give them a reason to change. Customers need a better product, or a cheaper price. Employees need a new mission, or a new incentive. In any case, it is usually excruciating pain that convinces a person, or a business, to consider a proposition that alters their status quo. Pain like: a device or service that no longer works; an operating budget slashed; an external economic crisis.
Painful economic conditions are, in a peculiar way, ideal for entrepreneurs: They present us with numerous opportunities to convince people to change their behavior. The playing field is ripe for innovative products, services and business models. Deliver one.
No question, we face challenging times. But each of us has the chance to benefit from the opportunities intrinsic in the chaos.