There’s probably only one guarantee I can make for your entrepreneurial career: You will have ups and downs. How you deal with your ‘downs’ will determine your ultimate success.
Most would-be entrepreneurs see their dreams dashed when they experience their first big failure or crisis. They can’t persevere after a big set back in their business because they freeze up with anxiety and their fight or flight instincts kick in. They start thinking if it’s all worth it (stress, uncertainty, long hours)… It’s scary when all you have is you, and your company has fallen off the rails. But it’s in those early moments after failure, right when the shit hits the fan, that you must prepare to deal with the apparent catastrophe. Pushing it off and dealing with it ‘tomorrow’ just won’t work. Delay is fatal in entrepreneurship. That’s when constant stress kicks in; sleepless nights begin and you start to lose control.
I remember the stock market crash of 2008 vividly. Relatively new in the industry as an entrepreneur, had been at it for only a couple years, I was virtually all-in on a few small cap commodity plays – all of which collapsed in value. I lost my shirt over the course of a couple of months. My net worth sank by 85%. To make matters worse, I wanted to propose to my wife (girlfriend at the time) but wondered where the hell I would get the money to buy a ring. What’s more, Christmas was quickly approaching. Things looked bleak.
But I did something smart after stupidly losing nearly everything… I rejigged my entire business model to go after low-cost advertising and marketing for public companies.
You see, up to that point, I had built my entire business around a high-end, sort of a boutique style marketing offer. Also, like many young men looking to capitalize quickly, I reinvested nearly every penny I made into high risk/high reward public companies – and it had worked well during the frothy market. My business was known for providing unique and outstanding marketing programs, but it came with a hefty price tag. And the market was favorable, so reinvesting profits quickly 2X’d my net income. However, when it all came crashing down, I lost nearly everything and realized that if I didn’t change that model (quickly), and get the word out on the street, potential clients wouldn’t even consider us because of our high-end stigma. Big price tags act as a repellent in recessions.
Think about it… During a recession, people aren’t looking to buy Louis Vuitton handbags and sports cars if even they can afford it. Economic uncertainty makes the feasible appear unaffordable or reckless.
It’s dumb, but the first expense cut in times of economic uncertainty is marketing… And I had a marketing company. Hence my strategy.
The strategy worked well once implemented. It took about 3 to 4 months to get momentum back, but once caught, we took off. The lower cost for what was a high-end marketing platform gained real traction in our niche. And by 2010, we had a record revenue year.
1. Start accomplishing small, daily goals: It’s critical that at that moment, the ‘holy shit what do I do now’ moment, you start setting little, achievable tasks in place to begin the recovery. Much of this game is mental, and when we see tangible results from our efforts, no matter how big, it sets us up for wins. Start with small tasks so you can see yourself accomplishing things on a daily basis – don’t hunt the Buffalo right away. If you have a team of employees, this strategy is critical because it takes their minds off uncertainty, builds camaraderie and boosts morale.
2. Build alliances with competitors: If you’re in the middle of an industry-wide recession, use it to build bridges and form mutually beneficial synergies with your competitors. For online businesses, use the opportunity to expand your affiliate marketing offers, establish a guest publishing program and so forth.
3. Invest in education and new programs: Few do this, but slow periods provide us with an opportunity to expand our knowledge base. When business is booming, we have little time to research, build new marketing programs or take courses which may prepare us for the future. Slow times allow us to do such things, yet most don’t bother because they go into ‘squirrel mode’ and pinch pennies. Again, it’s important to accomplish things in slow times. It does wonders for morale and confidence as an entrepreneur.
During the oil recession here in Calgary, residential rental vacancy rates hit 8%. Three years ago they were barely 1%. I knew competition for my rentals would be fierce as many landlords were giving substantial discounts on rent and even perks such as free first and last month rent. My strategy was to provide a better product offering, which required significant renovations to my suites. I believe that everyone wants to be proud of where they live. My view was providing perks and discounts on tired looking and outdated rentals was a gimmick approach, not the ideal. I had the goal, and accomplished it, of producing modern living quarters for affordable prices. In the end, I never missed a rent cheque and found fantastic tenants. By the way, rental vacancy rates are still historically high throughout the city.
4. Recognize that failure, if you learn from it, is payment for future success: Don’t go into a defeated state of mind because you failed, especially if you failed spectacularly.
The currency for success is failure. We learn the most from our losses. Analyze where you went wrong, study it, and use it to improve on your next offering. Failure is only catastrophic if you haven’t learned from it.
[Tweet “Only those who dare to fail greatly can ever achieve greatly. – Robert F. Kennedy #quoteoftheday”]
Losses hurt our pocketbook and ego as entrepreneurs. But they are necessary and all part of the journey. If treated as an asset, a learning opportunity, they will ONLY make you a better entrepreneur. You’re not alone in your time of failure, either. It’s a right of passage for every entrepreneur.
P.S. I’ve been in the trenches as an entrepreneur and come out on top. Let me share some of my best strategies to grow your business and find great investment opportunities. Subscribe to my free newsletter below. Only my best content will land in your inbox.