Last week I broke a taboo.
On my personal Facebook page, I shared that 2016 had been tighter than I would have liked. While there were many brilliant moments and lovely clients, there was one week when even though work had been done and invoices had been issued, my income was a princely $20.17.
I was having a massive confidence wobble where a j-o-b was looking attractive.
What threw me most, amongst all the positive, supportive comments, were my friends and small business colleagues who called or messaged me privately to say that they also had had a shitty year.
They felt that nothing they were doing seemed to be working, and that they were having to hustle hard for each and every sale. People who I never in a million years would have thought were struggling business wise … were doing it tough!
They also said that they would never admit they also were having a shitty year in public, and doing so was a “brave and courageous act” (aka career limiting).
You see, a business owner talking about doing things tough in Australia is a business taboo.
In public (and at networking events in particular), if you talk with most small business owners, the accepted practice is to talk about plans for expansion, how great the year has been or to discuss the new product/ service/ marketing strategy they are getting into.
This is particularly true of business owners who have been through any form of positive thinking training or exploration. They don’t want to focus on the negative, so they force their eyes to see only the positive, all the while steadfastly ignoring the drops in profits and mounting bills.
It’s only when you get these business owners alone, and over a wine or two, that often the brave, fiercely positive mask slips a bit.
So, here I was, breaking taboos and saying out loud and in public that while there had certainly been some spectacular times, there were also a few too many weeks this year when the phone was too quiet for comfort.
My personal value set and approach to life if things are tight, it’s because I need to know more, work harder or do more. If things are tough, I put on my hair shirt, dig out my self-flagellation whip and belt myself into hustling harder, pushing longer hours and learning more.
So, in the midst of beating myself and telling myself to “Suck it up Princess and work harder”, I met with a colleague, John Moodie. John is a consultant on business and personal resilience. He had a different take on things.
What if it’s not just you? What if the reality is that the economy is tight and you are operating within those limitations? What do you need to do to survive and thrive despite and not because of? What if instead of speeding up and doing more, you need to slow down and recharge for a bit? What if you need to find a way to boost your resilience bucket before you do anything else?
I was gobsmacked. Maybe it wasn’t just me!
In the interests of testing this theory, I did some digging and fact finding. Was the economy struggling or was it just me who needed to do more?
My hypothesis on the economy conundrum:
If the economy is rosy, and your small business is struggling, then the problem is likely to be at your end.
If the economy is tanked and your small business is struggling, it is less likely that the problem will be at your end.
If the economy is tanked and your small business is booming – then congratulate yourself. It is all you!
I thought I would share my research, just in case you may be asking the same question in the dim, dark, silent moments in your business.
It’s the Economy
Let’s start by busting out a few facts and taking a good long look at the economy around small business in Australia right now.
The legally correct definition of a recession is two consecutive quarters of negative GDP growth in seasonally adjusted terms. I will leave it to the economic pundits to debate one a scale of 1 to 10 being how wrong this definition really is (ranging a little bit wrong to stupendously wrong), but that’s the definition we are working with.
What this means is that one quarter can see the economy shrink by 0.5% grow by 0.01% the next quarter and then shrink again by 0.3% and not be labelled a recession.
By this definition we are not in a recession. However, today we heard that the Australian economy officially had the worst quarter since 2008.
It may not be in recession, but by any stretch of the imagination, right now the Australian economy “Is looking really well” said in the same tone of voice you use when you talk with a friend with a life-threatening disease.
Truth Telling: Jobs Are Tight
We see politicians patting themselves on the back over the past year that unemployment rates are at historic lows of 5.6%. What we don’t see is the massive rise in part-time employment rates – with the trend strongest in males compared to females.
“Over the past year, part-time employment has increased from around 31 percent of employment to 32 percent. That’s a relatively large shift if you consider that it was around 29 percent 10 years ago.”
“Since December 2015, there are now around 132,700 more persons working part-time, compared with a 69,900 decrease in those working full-time,” said Jacqui Jones, Program Manager for the ABS’ Labour and Income Branch.
87% of all jobs created in the 12 months to July this year, were part-time according to Brisbane Times.
JP Morgan paints a more telling picture. The underemployment rate (the unemployed and people who want to work more hours) is now at record high rates of 8.7%. This underemployment rate is higher than at the height of the Global Financial Crisis.
What this means in practical terms, is that households on part-time wages can’t afford to spend as much on discretionary items as households on full-time wages. If your small business relies on individual people and families buying your goods or services, you will be affected by this jobs slow down.
Truth Telling: GDP Growth Does Not Equal Disposable Income Growth
Politicians and economists always mention the magic letters GDP (Gross Domestic Product). Australia has had consistently positive growth for what seems forever. But that doesn’t reflect the day to day experience of many Australians. Why?
Real net disposable income is a very different kettle of fish. Real net national disposable income has been low since September 2012. The overall economy may be doing well thanks to exports, but this has not translated into money in the bank accounts of individuals.
Truth Telling: Consumer Confidence Does Not Translate to Spending
All the economic surveys are telling us that consumer confidence is at the highest levels since January 2014. So why aren’t we seeing that trickle down into spending?
When you dig deeper, consumers are confident in the overall economic direction of Australia, but not confident about their personal finances. They look at their wallets and only spend what is there, and not with what they think may be there in a few years.
Truth Telling: Elections Negatively Impact Small Business
Most small businesses dread State and Federal Elections. They know that from at the moment an election is called until about a fortnight after the results are known, that people’s and businesses wallets hermetically seal shut.
2016 saw one of the longest Federal election campaigns in history. At the end of the horribly drawn-out campaign, people were so used to keeping their wallets closed, that they didn’t open them again. The ceremonial re-opening of wallets a fortnight after the election simply did not happen this election.
If political parties are serious about keeping the small business economy afloat, every election campaign in the future needs to be as short as possible – 3 weeks at the maximum!
Truth Telling: The World Went Mad in 2016
2016 saw Brexit, the US elections and terrible wars across significant parts of the world with gigantic waves of refugees fleeing conflict as a result. People felt unsafe and off balance right across the world and Australians were not immune to this fear.
Craig James, Chief Economist at Commsec, said: “Clearly, when there is a lot of uncertainty around, consumers and businesses tend to delay decisions to spend, invest and employ.” He also called the last quarter “The perfect storm”.
Truth Telling: Economic Summary
You are not imagining it. 2016 was a darn hard time to be in small business!
The Economy is Struggling. So What Do I Do Now?
In business and life, change can only happen when you face the facts. Small business owners like you and I need to face the unvarnished truth that right now for many small businesses the shit is hitting the fan.
We also need to face that we are not carrying an umbrella or wearing a raincoat. Unfortunately, accepting this fact will not stop the said shit from hitting the said fan, and splattering all in its path.
Unfortunately, we also can’t unplug the fan or stop the rabid shitting monster from doing its worst. The Australian economy is what it is, and nothing we can do will stop it.
All we can do is hope that the crap will end soon, and start to think through how we will get through the next little bit, and then what we will do once the fan and the shitting monster are once more silent.
Hope sometimes is all that we have to hang onto. That tiny belief that it will get better – if we can just hold on for another heartbeat or another breath.
This is where resilience (both yours and your organisations) kicks in.
John Moodie, believes that life is not meant to be endured or suffered through on a permanent basis. Yes, in the middle of a shitty moment, all we can do is endure, but when that moment passes, we need to take a deep breath, allow time to rest and recover, and then start again. Yes, our start may initially be a half-hearted wobble, but we CAN bounce back.
To think of it another way, one of my friends, Linda Watson, is a marathon coach at Dream Run. Her philosophy is that if you are training for a marathon, you need to pace your exercise training. You need times when you work hard and then times when you allow your body to recover.
Over-training is when injury happens. It also causes burnout and makes people swear off their dreams of running a marathon. In her view, more people quit from over-training than quit from not having the right skills.
Anyone other small business owner think that over-training is not just limited to running marathons? That perhaps they are just deeply tired and need a break to rest and recover?
The Great Depression Business Success Stories
In the interests of giving myself something to aim towards to help me focus on succeeding despite the economy in 2017, I went back to see what happened during the Great Depression.
Many of the iconic companies we know and love started in or just before the Depression. Names like Disney, HP, QANTAS and GE all had their starting point when we would imagine no-one in their right mind would want to start a business.
Retail was at the forefront of development. Woolworths opened its first store in Sydney on the 5th December 1924 and was known as Woolworths Stupendous Bargain Basement.
Vegemite hit the shelves in 1923, with the Hills Hoist patented in 1925.
Businesses were also buffeted by new technology during the Depression. In 1921 there were 75,000 radios sold. In 1930 this had risen to 13.5 million radios sold in that year. And how did clever businesses respond? They moved their advertising spend away from newspapers onto radios because that’s where the audience was.
Then Proctor and Gamble tried something out to engage their clients – something so powerful that we still refer to it today. They created the first “soap opera” – a drama liberally sprinkled with advertising for their products. And their soap sold like gangbusters.
While many businesses cut their marketing budget, Chevrolet decided to increase their advertising during the depression. For 5 years from 1931, they outsold Ford where previously they had trailed them 10:1.
In other words, it is possible to succeed no matter how crappy the economic situation is. There is hope.
Putting It All Together
If you have also had a less than stellar year in business, but are willing to keep going despite the economy, what can you do to be ready in 2017?
- December is a tougher time than the rest of the year to hustle your business. People’s attention is elsewhere. Perhaps you need a break from hustling. Perhaps you need to give yourself permission to take a break to recharge your personal batteries.
- Consider taking part in the course “The Meantime” by Tad Hargrave in January/February. This course helps you find the low-hanging fruit in your business. Yes, this is designed for conscious entrepreneurial businesses, and it is one of the best investments you will make. I proudly let people know that I completed the program and found the support and content superb (and hype-free). In my quiet moments, I always turn back to my notes for ideas.
- Remind yourself that people still buy during tough economic times. Yes, they will look for better deals, but they still buy what they need. And if you have served them well when things are tough, they will remain loyal when things improve.(Read more about marketing during tough times.)
1. Cut Costs. Sell assets, reduce debt and cut expenses to give yourself some breathing space. You need to create space while you create a more sustainable future for your business. If you can’t breathe, then everything dies.
2. Stop the financial leaks in your business. Do you take too long to invoice? Are your trading terms too generous? Are you giving away the farm? Are you so focussed on being nice and helping out, that you end up doing days of work for free? Focus on your cash and cashflow and plug all the leaks.
3. Find ways to get existing clients to rebook. It is harder to get new clients than old ones. Work out ways to get existing clients to re-engage with your business.
4. Reactivate past clients. Get in touch with past clients with a great offer to reconnect with them.
5. Sack poor quality clients. Not all clients are created equal. Clients who don’t pay, are not a good fit for your values or who constantly find fault with all you do, or who constantly push the scope of projects until you are working for checkout operator wages, need to be moved on.
6. Refine your focus. Work out who your ideal clients are and refine all your business marketing to target these clients.
7. Identify your most profitable part of your business, and find ways to promote that through marketing or alliances.
8. Raise your fees. This sounds counter-intuitive, but if you know you have been undercharging then this is the time to reconsider your rates. Undercharging has not been working for you, so you have nothing else to lose.
9. Get a part-time or full-time j-o-b to make ends meet for a time.
10. Build packages. Sometimes packages are easier to sell than individual services. How can you package your services and increase the value that you offer?
11. Look at your people. If something is not working, it is generally a people problem and not a systems problem. People in this context includes owners, managers and employees. Go back and look at your people. Ask questions. Check assumptions. Clarify your vision. Increase training. Go in with a spirit of enquiry and openness, not defensiveness and judgement.
12. Check your business model. Whether you know it or not, each business operates from different business models. If your income is patchy, perhaps you are pursuing the wrong business model. Get advice on different options to explore in the New Year.
13. Provide opportunities. Let people know if you have last minute cancellations or availability and offer them at bargain rates to keep your appointments ticking over.
14. Make your client’s life easier. Work out how you can help your clients cope with the end of year stresses. How can you make life easier for them given they are time poor?
15. Refresh your website and marketing copy, so you have your best foot firmly forward ready for the New Year.
16. Do more of what worked in the past. Reflect on what worked in the past for you and your business – and then assess whether you stopped doing it somewhere along the lines.
17. Don’t stop advertising or marketing. There is less “advertising noise” during tough economic times as other people cut back on their marketing spend. Lever that opportunity – get out there more and find new ways to promote your message.
Challenge is what helps you grow. You learn more about yourself and business in the challenging times rather than in the easy times.
Right now, many small businesses are living in challenging times. Perhaps the answer is to stop – breathe – recover over Christmas, and only when you have recharged your batteries, can you then plan to make 2017 a much better year. Yes, it may mean that you are in for a year where you have to fight for every sale. But it also may mean that you finally run your personal marathon and succeed in business where others have fallen by the wayside.
How has 2016 been for your business? I would love to hear your experience and thoughts in the comments below and will be popping in to add my thoughts and ideas to your comments.