In all my years of working with small business owners (as well as owning and running one myself) I have learned a few things. One is the value of seeking clarity. Clarity can help in making good decisions. This starts with the reality that a business owner faces hundreds of decisions to make on a weekly, or even daily basis. Whether we realize it or not, we all use certain principles to help us make decisions. An example would be “Let’s make sure we have all the information before we move forward.” That’s a good one. But what if you have to make a decision right now and you don’t have perfect information? There are literally hundreds of principles like this and all of them are “good”. There is a veritable legion of purveyors of business wisdom out there who can douse you with principles. A good manager has the judgment to know how to quickly sort through the thicket and select which principle is the right one to use first, then is able to apply the principle to make a good decision. Unfortunately many managers don’t understand this and they stick stubbornly to principles that are not a good fit to the situation at hand. Others are like windsocks, adopting new principles as randomly as the wind blows.
Sometimes speed is more important than having perfect information. Sometimes speed is the “name of the game”. I have taken to using that phrase a lot. It is shorthand for knowing what principle is the right one to use to make good decisions in a particular situation. Having this judgment is rare and valuable in business management.
When facing an economic downturn, there are a few principles that are paramount. One is moving quickly. As I’ve written before, we’ve learned that is one of the secrets of small businesses survival during recessions. Make cuts quickly in order to preserve cash. Anyone who enjoys going through detail to make sure no stone is unturned can end up paying a heavy price. Days and weeks can be consumed attempting to get perfect information on every single expense line item when the result is losing tens of thousands of dollars lost in order to save hundreds of dollars.
And that leads to a second principle: focus on the big things first. What are your major spending items? You can spend half a day going through the cell phone bill later.
Having a sense of urgency is a third example. It is cliché to say “hope is not a strategy.” That’s true, especially in a recession. It’s tempting to hesitate before making cuts because they are painful. It’s easy to tell yourself that things will get better next month. The way that I see it, your business is your lifeline to your livelihood, and those of your employees. A recession is an existential threat to that. Even a small probability of losing it should be taken very seriously.
Another thing I’ve been saying a lot is “if it was easy, everyone would be doing it.” So seek help. First, you need good information to make good decisions. That means timely, accurate and relevant accounting. I am biased, that’s what my company does, but I am here to tell you that you can and should expect it, and it is more important now than ever. Second, having good instrumentation is one thing, but you also need the expertise to help you interpret what the gauges and dials are saying. Even a pilot needs a navigator. So if you’re not the most savvy around financial statements, that’s ok, but I would gently suggest that it’s important to find someone who is that can help you. Otherwise you are flying that plane at night through the mountains, with no instruments to guide you. You may make it fine, but why take the chance? You’ve got enough on your plate.