The Attitude Adjustment In A Downturn – No Need For Desperation

The constant cry in the media is the desperation of the economy.  Since my view of economics is different than the so-called experts, we will leave it for a discussion at another time.  What is important is having an attitude adjustment in the present downturn and for that matter in any seemingly desperate situation.

In my last posting, I mentioned poor executive planning in my second business such that the personal injury caused all sorts of repercussions to the business entity.  This incident caused a downturn in business activity.  A downturn has many different drivers and instigators.  How do we deal with events that result in emotional impacts to the business entity and to all the humans that are involved?

What got me thinking about all this was the number of tragic news stories in our area regarding murder-suicides and what the relationship was to downturn events in the lives of the people.  I had to examine my own environment and acknowledge that things are different in my business then they were in the past.  I was reflecting on all the impacts the new federal legislation will have on the small and medium business environment and what the egregious cost will be to all of us.  I was reflecting on the real unemployment numbers and what a State Senator said to a group of us  - “When small businesses go away, the business and the jobs they provided rarely ever come back.”  In all my reflections and thoughts, I asked myself why am I not desperately depressed.

Then it dawned on me – my background gives me a different perspective on life than many folks.  So, what is that and how have I applied personal life lessons to business?  It all started off from a lot of military training that I had.  Although I was Navy, some of that training came from a Marine instructor that hammered home the idea of adapt, improvise and overcome.  These simple words when applied to life and especially business life allow one to extrapolate into common business activities like these:

• Adapt – to the shifts in markets, to customer expectations, to product life cycles, capital markets, legislative encumbrances/regulation, etc.

• Improvise – simply, in business this is called the process of innovation.  This is creativity through the use of whatever is available.  This should not be limited to technology but is extensible to financial and strategic models as well as the business model in total.

• Overcome – this is all about risk management and problem solving with a perspective of prevailing over the situation, competition or the circumstances.
  

I had a lot of interesting training in those military days but one that sticks to the heart of an attitude adjustment was the comments made by the CO (Commanding Officer) of the SERE (Survival, Evasion, Resistance & Escape) School in San Diego back in the day.  He was a Vietnam POW.  What he related to us was that in the midst of great trial there are three gifts that transcend all and remain forever to keep ones attitude adjusted.  He talked about faith, hope and charity in the middle of calamity.  Agreeably we were there to enhance our preparedness skill but from a perspective of humanity; these three are core to survivability.  I recalled that lecture today.  Since these three values are a common part of my everyday thinking, I often don’t think about why I react differently than others when the muck sprays through the fan. 

What I learned form this Navy Captain fit well with my worldview.  His first point on faith was simple yet complex:

• He said you have to first maintain your faith in the living God since there are no atheists in foxholes or POW camps let alone the heat of life. 

• He said you have to maintain faith in your Country as our Forefather originally founded it.

• He said you have to maintain faith in your family that they believe you are there even in the midst of trouble.

• He commented that when we tell our fellow warriors “to keep the faith” that we are reminding them of first three points.

• He said you have to maintain faith that God or your county has not forgotten you.
  

Then he talked about hope as being built on faith first.  Our hope has to be built on a foundation that is substantial and not on some person or politician who is full of cow plops.  Hope in the Greek language has a meaning of confidence.  That is why you put your confidence in those who have proven themselves to be true, full of virtue and valor such as your fellow warriors and family.

Then he finished off talking about charity.  This is more like the idea of goodwill and benevolence, which is that first order of affection to others.  This transcends everything.  It could be as simple as a smile, a thank you, a nod of acknowledgment, and an extended hand.  The idea forms from that first point of faith.  It is the right thing to love our neighbors as ourselves especially in the midst of the fray.   The hardest aspect in the intensity of a downturn is to have that charity toward ones self.  Yet, we have to start there so that we have to give to others.

I have applied these principles and others when things are going well or in a downturn.  My wife always reminds me that when ‘things get tough, the tough get going’.  It is about attitude.  As the CO of SERE School taught us, those that do not have a mental attitude that is based on principle and desires to survive, don’t make it.  With that, it is the responsibility of those who are of a strong mental attitude toward life and business to extend that meaningful charity to hose spiraling into the potentials of despair and desperation.  Desperation can show up in business in many ways that ultimately cause the business entity to flounder.

If we focus on the media, the economy is in a tailspin.  OK, the fact is that for the small and medium business environment that drives over 90% of the economy and employees about that same percentage; things are tough.  The difficult aspect is that we are getting hammered more and more by the legislation.  Who knows what the next year will bring.  But there is no reason to become desperate if we stand on those principles of faith as mentioned as well as our fellow business colleagues; that we have hope for tomorrow based on the proven track records of our businesses and are able to improvise through innovation even if we have to restructure what the business entity is all about and that we have charity towards ourselves and our business colleagues.  This may mean that we look more to new collaborative methods of approaching the markets or how we better extend common courtesy to our vendors and our customers.

To continue to build a sustainable legacy for our business entities, one primary key is an attitude of success.  We want to remember to adapt, improvise and overcome through living in faith that gives proven hope so that we can be charitable.  Remembering what I had the privilege to learn from my friends from the Teams - ‘yesterday was your only easy day’ and my addition to that is – every day is a Monday and Murphy will show up.  We have the capacity to build up others and carry through the inane times, as we are confident in that which has given us that eternal and internal strength.

Is There an Inheritance – Succession Planning

When I was in the military, we operated on the premise of expendability. This premise forced us to train and develop our replacement. The idea was to ensure that the cross training would develop an individual to step in and be effective in the area that was immediately made available by an unplanned exit. Not only did we train individuals in the technical aspects of various specialties in a team, we developed leadership and management skills. In its simplest sense, what we did in the military was succession planning - developing your replacement.

It is amazing how quickly many of the great lessons learned in the military go by the wayside when one engages in business. I believe that this is more function of academic deficiency than it is the common sense that intuitive business leaders engage in. My experiences in succession planning and the lack of it span private companies as sole proprietorships, startups and to the larger corporate environments. In most every case, succession planning was not a fundamental in any of the business type entities.

My first regression story goes to the second business that I started after leaving the military. I had a very successful landscaping business. I was able to build it from a one-man operation to having up to twenty employees. It started in the maintenance services and transitioned into irrigation and landscape design and construction. In the late 1980’s this was a wide open market and very lucrative. The business was growing, the margins were great and the cash flow was

The training program that was in place was to develop technicians that could install irrigation systems and other landscape construction technologies. The company did not have any other engineer, designer, planner, sales and marketing person other than moi-même. The company was a sole proprietorship with employees. At this time I was able to scale back to about seven to ten depending on the project size. This meant that I was the primary chef for all the business side activities. I was relatively young, in my mid-thirties and had a great family too. I thought that if I built the business correctly, it would have a legacy that I could raise my children up into. This would be something they would inherit. You know, the idea of a family owned business. Heck, I never thought about an exit strategy in my business plan or how my children would be imbued with the characteristics needed to follow in my foot steps, everything seemed perfect at the moment.

Did you know that more than 80 percent of all businesses in the United States as well as throughout the world are family owned? And, unfortunately, most of them, some 65 percent, never survive beyond the founding generation. The tragedy being that there is not a well defined plan that deals with the issues of who will do what, when and what skills does son, daughter, cousin or other relative need to have to ensure a business entity with a sustainable legacy.

In my case, I never took the time to plan and then an unplanned exit event occurred the third year into the business. My wife and I had just bought a large parcel of land and we were constructing a barn from the timbers on the property. For some unseen reason, I tangled with a chainsaw. The resulting accident was significant to my person but more so the business. There was no one to step into all those skill sets that I just mentioned a couple paragraphs back. The net result was:

• No project management for scheduled jobs
• No marketing and sales activity – no new jobs bid
• No back-office management – this was left to my wife who had virtually no insight to the operations of the company
• Taxes became over due
• Vendor accounts became over due and called in
• Seven people were laid off
  

In the end, I had to liquidate and shut the business down. We did not have to file bankruptcy but sure did come close. My recovery time was about a year and it took longer than a year to get all the debts paid off and back on our feet financially.

Lessons learned were:

1. Identify the critical operational and back-office skills that need to keep things functioning
2. Set up a training program
3. Identify the key personnel that have commitment to the business and want to learn more
4. Develop their skills – mentor them
5. Give responsibility and authority to those who can prove they have learned the skills
6. Think through the what ifs, the Murphyism – what is risk management
7. Develop the Exit Strategy
8. Have good communications in place
9. What I learned in the military for training your replacement is applicable in business
   

The simple facts are that we do not know what life will bring our way as we journey through but good stewardship of a business requires that planning is a part of the overall process to sustainability. Know that a Succession Plan can be as simple as training and mentoring employees will provide an avenue for the business to continue in the event of some unplanned event that may cause one or more of the key persons to exit; either temporarily or permanently. What is your Succession Plan? What are the key elements that should be considered?

I learned after this business adventure that I would do all I could in my future businesses and even in the corporate world to understand an exit strategy that incorporated a succession plan.

Policy and Location - What Does it Matter?

Today the Small Business and Entrepreneur Council released it new report:

SMALL BUSINESS SURVIVAL INDEX 2009:
RANKING THE POLICY ENVIRONMENT FOR ENTREPRENEURSHIP
ACROSS THE NATION

It is important to understand what is happening in the policy development of our various states. It is not only what the Feds do in regards to their supposedly limited role in commerce according to Section 1 of the Constitution but more importantly what are the affects of local and state legislators.

It is unfortunate that most of us engaged in the SMB, entrepreneurial and investment communities are running hard and fast to keep the lights on; therefore, we don't always have the time to deal with policy issues that affect us. I appreciate the work of the SBE and the conservative approach to business that makes life better for us all.

I have learned that policy affects how business is done as much as the market and customer demands. I've also learned that where we establish our business entity matters when it comes to net profits. I always tell those that I have the opportunity to consult with that we need to look at what the ultimate legacy will be of the business entity and then choose the correct entity type and where it will be initially registered.

I would encourage you to look at the report to see where your state ranks. As you consider what your business entity is and if there are areas of concern, give me a shout and I'd be glad to have a chat.