My career has been long enough that I was working on startups during the dot-com bubble of the late 1990s and the Great Recession of the late 2000s. I’ve lived and worked through panicky times before, and I can tell you that right now I’m seeing that exact same kind of panic, squared. I can also tell you that the main reason for the panic, strictly in a business sense, is that we’ve gone way too long without answers. The longer we go without answers, the worse the panic gets.
I’m not going to tell you that it’s no big deal to experience fear for your business and your employees. It is a big deal. But I will tell you that we need to be able to work through panic and through big deal events. The overwhelming reaction from your brain and your body will be a desire to shut down and sink into it.
Now is not the time for that. Now is the time to put everything on the table.
The entrepreneur’s response to panic and failure
Many years ago, I was sitting at a bar with a friend of mine when the subject turned to failure. At the time, I was building my company, Automated Insights, which was in a really risky place. He was building his own company, which was only a couple weeks away from shutting down.
As we talked through all the shadows closing in on his business, he said something that has always stuck with me: “What’s the worst that can happen? I don’t know — maybe they take my house.”
The important thing is that no matter how you are emotionally affected by risk and uncertainty, you still immediately respond when you realise you’re in a crisis.
While the cavalier nature of his answer threw me, I totally understood where he was coming from. I’ve always been a risk-averse entrepreneur. Not that I won’t take risks, I just like to think about all the things that can go wrong and plan for what I’ll do to mitigate them before they happen.
My friend was and still is the opposite. He likes to jump into the pool before he knows it’s icy cold. To him, risk is something you deal with when failure is imminent. For the record, he kept his house. He rebounded a few months later, starting a company he is still running today.
My point is that all entrepreneurs live somewhere on this risk tolerance spectrum, and both of these endpoints are just as legitimate as any point in between. All entrepreneurs respond to risk and failure differently. But the important thing is that no matter how you are emotionally affected by risk and uncertainty, you still immediately respond when you realize you’re in a crisis.
What is in and out of your control?
The coronavirus will have a direct impact on every business, everywhere. An easy mistake to make is to spend too much time focusing on how bad things are today. It’s easy to do because of that human nature instinct to sink into the problems.
“You may hit these worst-case scenarios much more quickly than you plan for.”
But as difficult as it may seem, I want you to think about how much worse things can get. You’ve got to stare reality in the face, take note of your current situation, and then plan for three different degrees of how bad things can get. These are the best-case scenarios, worse-case scenarios, and worst-case scenarios for your startup.
Before I get into what your plans should be for these scenarios, let me first say that you may hit these worst-case scenarios much more quickly than you plan for. That’s fine. Unless your worst case is shutting down, and honestly even if your worst case is shutting down, you can and should always tee up three new cases and plan your next move.
The point here isn’t to pull miracles out of nowhere. This is where you build up some protection from panic. When these cases come true, you should be pulling ripcords on your plans, not scrambling to figure things out while the sky is falling, because chances are you’ll make the wrong decisions if you try to do that.
Every business is different, but there are two general sets of actions you need to take when drafting your survival plans. The first set is based on what is out of your control, which will be a lot. The second is based on what is in your control, which is something you’ll need to figure out.
Map out each scenario
First, you’ll need to determine the scenarios for each set of plans.
Best case: Start with where things are today. Measure how much of a hit you have already taken, and apply your most honest assessment of what it’s going to take for the world to get back to normal. You’re using your gut here, but that’s why you’re in charge. If most things start turning in the right direction soon, what will that look like and where will your business be at that point?
Worse case: Things are going to get worse, but there’s still a chance for a V-shaped recovery. This is where you’re looking at the unique components of your business, like your customers, your prospects, your funding, your partners, your supply chain, even employees you need to let go, and imagine a recovery where some or most of that isn’t coming back.
It’s hard to imagine a worse case when the best case already isn’t so good, but a decent rule of thumb is to pick a bottom you feel like you can still recover from.
Worst case: Imagine the potential recovery looks less like a V and more like a very wide U. Revenue goes to zero, customers cancel or fully disappear without returning. In the worst-case scenario, you need to dig deep and confront all the possible outcomes you’ve been afraid to address. Don’t get paralyzed — detach yourself and lay it out.
Now use these scenarios to make concrete plans
Start with what is out of your control. This is the ugly part. It’s going to require a hard look at each scenario and forces you to ask and answer some painful questions:
- What can you cut entirely?
- What can you reduce?
- What can you defer?
- What can you turn from rigid to flexible?
- Where can you reallocate resources?
Once that’s done, make sure it’s correct, conservative, and, above all, human. Revisit the most painful decisions and measure twice, because you’ll probably change your mind more than once.
I recommend communicating with your employees about what each case looks like, the likelihood of each one happening in your opinion, and your basic mitigation plan. Yes, even the worst case. Be transparent, but not hopeless. They’ll be losing hope already. Don’t pile on.
When that part is complete, it’s time to restore hope. Look at what is in your control, and ask questions like these:
- How can we bring in more and new revenue immediately?
- How can we evolve our business to solve new problems in this new reality?
- Which vendors haven’t we talked to yet? Because they’re probably in the same boat and we might be able to help one another.
- What haven’t we tried? Because it’s probably now or never, so eff it.
There are no guarantees, but there is always hope
When you run your own business, external macro conditions will always have an impact. Another friend of mine likes to look at the macro and say: “It’s worse than I hoped, but better than I feared.”
So separate the two distinct strategies for getting past this pandemic. We need to get to the other side with minimal loss of life, so on a personal level, stay home and do all the things the experts recommend. We also need to keep hope alive, so on a professional level, it’s time to plan, then think outside the box, then focus on making the future happen.
By the way, I didn’t want to write this. But now that I’ve written it, I’m glad I did. I feel better. That’s the thing about facing fear and discomfort: It sucks to do it, but once you get through it, at least you have a better idea of where you stand.
Once you know that, you’ll be able to communicate the future to your team. This is what they need. This is what a leader does. Keep them positive, keep them optimistic, keep them hopeful.
***
This article was originally published on Medium by Joe Procopio
Joe Procopio is a multi-exit, multi-failure entrepreneur. He is currently the Chief Product Officer at Spiffy, on-demand vehicle care and maintenance startup. In 2015, he sold Automated Insights to Vista Equity Partners. In 2013, he sold ExitEvent to Capitol Broadcasting. Before that, he built Intrepid Media, the first social network for writers. You can read more and sign up for his newsletter at www.joeprocopio.com
