Entrepreneurs Managing Stress in the Recession
America is a nation built on the ideas and energy of its entrepreneurs. From John D. Rockefeller to Bill Gates, profound economic and social change has been spurred by entrepreneurial enterprise and tenacity. Central to the American capitalist system is the belief that anyone can succeed with enough hard work and dedication. Entrepreneurs embody that belief.
The current recession has tested this notion in profound ways. Entrepreneurs are finding that their once tried-and-true approaches toward business are no longer reliable. The impact has been dramatic throughout the country.
Barbara Feinberg of Futures Coach, an executive and life coaching company, recently asked for my take on how small business owners are faring in this time of recession. As professionals whose job it is to help entrepreneurs take their businesses to the next level, Barbara and I share a deep concern for our clients during these difficult times.
Barbara has 30 years of management and counseling experience. She has helped small business owners handle transitions, enhance their management styles and discover their life goals. Barbara is also working with entrepreneurs these days to help them manage stress during the recession.
Barb states, "My insights are designed not only to describe what many of my clients are experiencing right now, but to hopefully shed light on how we are working together to weather the storm."
Barbara Feinberg: Entrepreneurs are known for their optimism. In recent months, have you seen a shift in your clients’ attitudes about the future?
Andy Birol: Yes, their optimism has diminished. They see core institutions, particularly banks, letting them down. And they have concerns that the new government will tax and spend them to bits.
That being said, as long as they have energy and passion in what they do, entrepreneurs will prevail despite bad odds and gloomy forecasts. In the last 30 days I see many owners beginning to regain enough of their optimism to start looking at opportunities to grow their businesses and think about more than just surviving.
BF: Hard work has been the keystone for small business owners. But working harder is not sufficient in this environment to succeed. How are your clients adjusting to the need to work differently, not harder?
AB: They’re struggling with working differently. Many older business owners expected to be cashing out and moving on, and the notion of needing to reinvent their businesses is particularly hard to swallow. And younger entrepreneurs are coming to grips with a reality that includes scarcity of capital and weak consumer demand, which are brand new to them.
So many influences and threats facing smaller businesses require owners to work differently. There are two new rules that all entrepreneurs should embrace:
- Manage a balance sheet for liquidity. Credit and cash will be scarce and valuable for years to come.
- Learn to predictably grow profitable revenues. Not relying on traditional customers and market niches is imperative as the recovery will shift wealth from some segments to others.
BF: Generally, innovators tolerate risk well. Business risk lately has risen exponentially, often through no fault of the business person. What are you hearing from your clients about initiatives that may seem “risky?”
AB: Everything is risky when you can’t count on predictable value, return on investment or the decision-making timeframes of others. Each of these concepts is a pillar of small business success:
- Predictable value of resources like land and inventories allows owners to invest wisely
- ROI gives CEOs a measurement for deciding how much to risk
- Rational decision-making by vendors, customers and banks must be relied on for an entrepreneur to make choices
And particularly as banks avoid risk by changing the terms of credit lines that are the oxygen supply of a business, owners have become afraid of making commitments.
BF: Small businesses depend on others for their success, starting with the banks that finance them. Have your clients adopted new ways of working with their bankers, suppliers and customers?
AB: Unfortunately, they are re-learning to “trust everyone yet trust no one.” This means they rely on whom they must, but they no longer feel as confident that they can predict the behavior they once counted on. They see too many examples of people making foolish short-term decisions. So they aren’t making decisions they aren’t absolutely sure about. Unfortunately, this is not possible, and not making a decision is a decision in itself.
BF: These changes have imposed enormous personal stress on your clients. How are they dealing with the pressure?
AB: Some are shutting down and refusing to make decisions or hoping that riding out these times will bring back the traditional good times. Unfortunately, as McKinsey reports in a study they did of the last five recessions, 60% of leading businesses that go into a recession ahead of their peers do not come out in the same shape. But more are taking great joy in delighting their paying customers and living within their new means. Producing great products and services is taking on a new meaning for ownership and the pride that it brings. It is sort of a “back to basics” approach.
BF: Is there anything different about the advice you offer your clients today from a year ago?
AB: Absolutely. A year ago my advice was, “You can’t change until your pain of change is less than your pain of not changing.” Waiting until that was the case was okay. Because of recent events, time is no longer infinite. Companies can run out of money; customers who pay their bills, loyal vendors and, most importantly, credit lines disappear very quickly or without any warning. These factors make playing the waiting game far riskier now than in times gone by. So my advice now is to take action wherever you can with confidence. Doing so will put you ahead of your fearful competitors.
BF: You offer your clients creative ways of shaping the business model. What help do you offer them in dealing with the pressures?
AB: I remind them of how successful they have been in the past and encourage them to realize that nobody knows and understands their businesses better than they do. I remind them to focus on their Best and Highest Use. Refocusing on what you like doing, are good at doing and the market has valued you for doing is critical.
AB: Now it was my turn to ask Barbara a question: How do you work with your executive coaching clients on managing stress?
BF: I see myself as complementing the work you do. I help my clients reach their Best and Highest Use as individuals, both personally and professionally.
More specifically, I try to get a picture of where the key stressors are at work and at home.
Today’s economic realities are challenging, but as you noted, for some that can be invigorating – the old “when the going gets tough … “ response. However eager they may be to meet the issues head-on, entrepreneurs might also find their relationships suffering from the pressure of the current environment.
By using a wide-angle lens in talking with my clients, I help them sort through the tangle of professional and personal stress to find some new techniques for communicating with people both at work and at home. I also emphasize the importance of relaxation and physical wellbeing as critical pieces of a broader coping strategy.
Need help with your business during recession? Contact Andy Birol by using the form below for more information.