As we face (yet another) period of economic uncertainty, many business owners I speak to are asking what they need to do to weather the storm. As a business owners who has been through two big recessions and lived to tell the story, I wrote this blog to share my experiences and some top tips to help you focus on the right areas.
Rewind to 1990
At the start of the recession in 1990, my last but one PAYE job ended quite abruptly and unexpectedly. Although I enjoyed a pretty much uninterrupted boom (and quite a few bottles of champagne) through my early career, being made redundant came like a bolt from the blue.
My wife and I were expecting our first child, so our financial situation rapidly became unsustainable. My next job was not in view yet and we were going to lose the second salary very soon. For quite a few weeks I floundered, then I gave myself a talking to and did two things.
First, I began volunteering at the Star and Garter Home, then on the edge of Richmond Park. A refuge for severely injured soldiers, sailors and airmen, they needed unskilled volunteers to give their time. I suddenly had loads of that and was more than happy to give it. Through meeting and serving these brave and courageous men and seeing the mental and physical trauma some people live with daily, I realised that far from my life being devastated, I was in fact extremely lucky, in so many ways.
The second thing, perhaps prompted – or at least made easier – by the first, was to sell our lovely, Edwardian terraced house in Twickenham and rent a much cheaper property more suited to our circumstances at that time. Still a very pleasant place to live, it became our first family home and the platform from which to relaunch myself.
My next job came because I had helped a major institution solve a serious property problem in East London and they hired me on (initially) a 12 month contract. Over the next five years I was part of a team dealing with a £600,000,000 portfolio of commercial loans, most of which were non-performing in one way or another. In the end, I was the only one left in that team.
It was fast moving and a fantastically steep learning curve for everyone. Part of my remit was to meet people with failed businesses and loans they could not service, to tell them to stop and to hand back the keys. Don’t judge unless you have done this, but the tough decision I took to match my own commitments with my changed circumstances, promptly and ruthlessly definitely made this easier.
In 2008/9 I was drafted in to work through a very similar debt book with connections to Northern Rock and Lehman Brothers. That one was about £887,000,000. Several factors made the strategy and outcomes quite different but that’s another story. I carried out that work alongside my business here, in Hampshire helping business owners renegotiate lease terms with worried landlords. Unsurprisingly, I was quite good at it, and it has to be approached in the right way to get a good result.
My top tips
With another recession on the horizon, in a way I know I’m fortunate to be able to say “I have been here before”. So here are my top tips to help you weather the financial storm:
- Put your situation into perspective by helping others with bigger problems than you.
- Review your business plan in light of changing circumstances and outlook – does it still serve you?
- Take the hard decisions early. I can’t emphasise enough, how important and beneficial that can be.
- Be smart with your resources. Don’t splash out, but don’t make cuts that will hurt you long term. There has to be a business case for every penny.
- Don’t be light weight with a heavy weight problem. For example, I see this with many clients renegotiating the lease on their premises. If you want your landlord to take you seriously, he needs to see that it’s serious and you’re serious. Put together a comprehensive, forceful and properly argued case (of of course – just call me!).
- When cashflow is a struggle, always pay the body that can ruin your business.
Need some help?
If you haven’t questioned what your premises are doing to take your business forward recently and whether they are “the right fit” in the current climate, then it may be time you did. I have a suite of online courses that could help you discover the key areas you need to consider and change the way you think about premises forever. Not to mention save you lots of hassle, time and money!
Click here to discover more: https://talk-to-jim.teachable.com/