“Don’t react. You must respond.” – Daymond John
Major world events that have severely impacted the economy have happened 47 times in the United States since the signing of the Declaration of Independence, according to Daymond John speaking at Hawke Media’s Quarantine Conference.
While something of the magnitude of COVID-19 was and in many ways still is hard to fathom, your business has to be prepared. Naivety is an expensive luxury when you don’t build your business with historical context in mind. Businesses that weren’t prepared or worried about market corrections in 2008, hadn’t necessarily learned their lesson from the dotcom bubble bursting in 2000.
While each event impacted the economy differently, they both led to recessions because of over-speculation on different aspects of the economy. 2001 being technology and 2008 being real estate, all of which were likely in most entrepreneurs’ lifetimes.
Briefly entertaining If COVID-19 hadn’t hit, we can speculate that there would have been some major market correction as the stock market soared to record highs. Early in 2020, people were scrambling to predict when and how the next economic downturn would hit. The Motley Fool offered 20 predictions for the new year that ranged from an expected downturn in 2021 based on historical data around treasury bond inversions to another good year to a 10% correction.
How do you prepare for all of these outcomes or even the one you didn’t see coming? You plan to adapt.
It won’t always be easy and as much planning as you do, you may still have to make hard choices. That’s just part of being an entrepreneur. You become responsible for the livelihood of others and your decisions impact the lives of others in significant ways, practically on a daily basis.
Here are three ways to prepare yourself and your business for hardship that we learned speaking to Daymond John:
1) Get Closer to Your Customer
People are still spending and it’s important that you’re there to A) communicate with your customers and develop a rapport B) identify trends and respond to them quickly and appropriately.
Traditionally, Daymond had been about 7 steps away from his customers and that presented an issue because he had to rely on middlemen to reach his customer and the money.
However, with the advent of newer technologies bringing the world closer together it opened up the door for the rise of direct-to-consumer (D2C) brands. It allows brands to not only communicate directly with their customers and build relationships with customers, but brands are also able to decrease the number of interactions a customer has to make before completing a purchase, 1-3 steps away from your customers being Daymond’s ideal degree of separation.
2) Be Transparent
“Everybody thinks you walk on water”, so it’s important when facing a difficult time to lay it all out for your employees. At every level of your organization, you’re all in this together, and showing them how this will impact everyone from top to bottom helps form meaningful perspective.
While Daymond communicated that he wasn’t letting anyone go at the moment, he did tell his staff what the pandemic meant to him personally and to their business. That there may be some tough decisions in the future and he needed them to understand in any circumstance.
Daymond looked to his staff for ideas. You hire people smarter than you for that reason and to ignore the talent in front of you when building out a strategy to combat a crisis is a fool’s errand.
Your biggest asset is your team.
3) Take Inventory
You need to know what you have available to you. It’s a simple maxim. You wouldn’t want to bring a knife to a gunfight because you forgot you had a gun stashed away in your closet.
Inventory means everything down to the floorboards. “Your time, your staff, what money you do have or you don’t have, your Rolodex, your physical inventory, your physical space if you have, the platforms you have, and the customers that you have.”
What’s going to get most people through a crisis is the relationships they’ve already built and need to maintain, whether that be with customers or other businesses.
It’s 21 times harder to acquire new customers than it is to upsell existing customers. When uncertainty precedes every decision it’s important to look at the data and make informed decisions.
Consider how you can leverage the people that already have a relationship with your brand. Get creative and offer them more value.
This extends to business relationships as well. Using your network and seeing how your connections can contribute to what your business needs to make a positive impact for your customer and community can ultimately help you navigate through difficult times, create new revenue streams, and reach new audiences (and vice versa).