Every business will experience a mixture of good times and bad, Without preparation and planning, the bad times could through your business into a crisis which requires extra leadership skills. By Gary Shotton #000303
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Crisis Management
By Gary Shotton
This text is in Extreme Rough draft and will be edited in the near future.
Hello, my name is Gary Shotton, and I’m here as a part of Inspiring Better Business. Today we’re going to talk about “Crisis Management”. You know, I have several calls to Africa and that’s a pretty regular call or discussion. They ask what do we do when we’re in crisis and that can happen to anybody and we’ve happened to pretty well everyone, first of all, crisis are probably created in two different ways or come to us in two different ways. One is, because we did something that put us in crisis, and two is that something happens in the world around us that we didn’t have any parts of life. And it threw us in crisis like turmoil or down downslide in the economy. But either way, we’re in crisis and crisis is something that is very unnerving. It’s very difficult on the nerves, and it can really affect you in a pretty big way. Now, doesn’t matter why we’re in crisis, but we’re in crisis. How do we get out of crisis? I’m going to give three steps that I think can help you in this situation. And I’m going to give you several examples of my life or at least one good solid example of where I dealt with prices and was able to come through it in a solid way. I’m pretty familiar with African culture, and a lot of our videos are for the African culture, but all of this applies to any nation, any language in any place. Number one, we have to start with a foundation. The foundation has to be strong, we have to do some things in our business so that we don’t find ourselves in crisis on a repeat basis. And one of those things is that many businesses have a small businesses seem to be family owned, family operated, and it’s very difficult for the owners to separate their personal livelihood from their business livelihood. What do I mean? If you have a business there’s a temptation to just take money out of your business to go buy some bread, kids need some shoes. Kids need uniforms and kids knew you’d need tuition for school and that’s taking money out of your business and applying it to your personal affairs. And I read very random basis, random way. And I suggest that you stop doing that and don’t do that. Because in the process, you’re not able to determine what your business is really doing. And in doing that, you’re mixing things together and how do you do that? Well, I have all of my life I have been able to basically write myself a check or pay make a payment from my business into my personal household budget, and I’m able to keep those two things separate. My father was a farmer, we had wheat, and one thing he did was he put the crop of wheat that he was going to use proceed, or a year later that seed would stay idle for one year, and then we would plant so one full year no matter how difficult the situation was financially. I know how difficult our household situation was. Nobody touched. Nobody even thought of taking that seed out of that special bins, special side spots and selling it because if we did, we would not be in business the next year. When it came time to plant the crop. That’s how you’ve got to think about you cannot mix the two and be affected. It’s going to be difficult. I know. We have another situation and this idea of separating your funds in cultures, especially developing nations we seems that everyone’s in crisis. So when everyone’s in crisis, it seems they find you to your door. When you are the one that’s trying to do business. You have some business income coming, and it looks like man there lots of money. I’ll just go over there and they’ll help me man, I’ve got to tell you, if you separate those two and you’re willing to help somebody, don’t take the money out of your company, keep that separate. It’s not your money, it’s the company’s money. And you can then help somebody to the limit that they are able to help out of your household side. So you’re willing to take some money from your children or your family or or that side of the of your life and help this person with their crisis. By the way, if you started helping people with crisis, there’ll be a long long line coming to your door knocking because you’re going to be known to the the worst one. That’s the Savior of the world. Every time somebody is in crisis. And believe me, there’s a lot of people in crisis on a regular basis. So keep them separate is number one.
Number two. When you’re in crisis, it’s time to cut back and guard all of your expenses in a big way. It’s not the time to expand. I was a mindset at different times that when things were not going well, I would rationalize and say this is the time if I just got bigger, this would get better. If I had more merchandise to sell, this would be better. And the reality is I believe that the right thing to do in crisis is to trim back, cut back, minimize, create a foundation of step where you’re really really strong at your foundation and build a foundation at the level you’re at. It’s not the time to go to the next level or start another business I’ve seen that mistake made. Then number three, we’ve got to be able to set aside as a part of good business. We’ve got to recognize that there are seasons and cycles in everything, especially in business. So if you don’t put aside some money when things are good and have a reserve, have something hidden, somebody that no one knows about, but you and your spouse, the money is that you don’t brag about you don’t talk about you’re just quiet about it, that you have money set aside and you have money set aside that help you take you through some of those ups. And downs that happened in business, how much money it was all that’s up to you, you’re going to have to decide shall view not as $1 amount but as a percentage of the revenue. If they say if I had set aside one full month of revenue, that would be a good figure. Another if you have a lot of employees you’d like to have set aside at least as a guide. All the money that talks would take to pay the employees for couple three months. That sounds like a lot of money. But those are the kinds of things you’ve got to do. Set yourself some benchmarks and create some reserve and make sure that you don’t touch that reserve. Every time you have a little need or do it that you don’t expand your business but just because you have some extra money, that money is set aside. There’s a season and a cycle. Now let me tell you about the year 2008 and 2009 in my business I’m in a machine shop and I’m telling you we are going great from 2006 2007 and even most of 2000 the year 2008 But the beginning of 2009 Guess what crisis came. I’m potentially in trouble because the sales and the revenue for the entire world close loans slowed down at that point. And especially in my customers just stopped buying. We didn’t have nearly the amount of customer demand as we had before. So what did I do? Number one, I have already separated my personal friends from my household, but I’m already good in that spot. And number two, I started cutting back every single expense that I possibly could cut back, including I had to relieve sick 41 employees from employment. I didn’t want to I had tears in my eyes. But I had to say to 41 people, here’s some bonus or in this case unemployment insurance and do you have some money and I cannot pay you anymore. So I’m not going to have you come to work for me for an extended period and maybe never again. I went from 64 down to 24 people and there’s where I could I’ve had every expense. I help in any way we looked at every single thing to cut back we did not expand and I knew that this was going to be a cyclone season. And in number three, I did have reserve I had a nice generous amount of reserves. And that reserve was set aside I didn’t advertise and tell any of my workers how much I had because I had a lot I had more than enough to get us through. I was thinking a couple years. Not Not all the expenses for a couple years, but make up the difference until this thing turned around and came back around. And I started paying my vendors early because I had the money. I was gonna pay them anyway and I was a blessing commands to them both. And so I was the one that was paying my bills early. I had reserved and guess what, in less of just about one year this all turned around in a very positive way. And they started demanding more more jobs, more work more income. I actually in by 2011 I had to build a new building and add more machines and more people. And it was a wonderful time of year because I made it through the cycle. I had the reserve that get me to the other side, little extra tips. If you’re the one that can come through a downturn, a cycle that will be there. And if you can come through on the other side with some extra cash, you can buy businesses you can buy things you are in a powerful position to advance your own business in a way that most other people don’t because they’re out of cash. There’s nothing worse than running out of cash in a basement and you can’t afford to get down to four. So have that reserve. Last but not least I have a solid belief that God’s on my side. And he’s always helping me that’s provided that I have done good business. I have to do the good business first. I have to be on top of my numbers. I have to be doing things that are going to be that God can work with it because he can’t fix things. He can just a set accelerate the work that I’ve already done. Well I hope this helps. Thanks for being a part of Inspiring Better Business. Thank you!!
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2 Comments
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Thank you so much, Gary, for sharing this truth. Most people forget business and business owner are two separate entities.
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Thank you so much, Gary, for sharing this truth. Cash is the blood of the business and the sooner business owners learn this fact, the better they will be in handling the crisis moments.
