Business cycles and how to deal with
Like most things in life, in business or entrepreneurial journey things may come in waves. It may happen all in the same time a lot of clients, a lot of projects, a lot of results, and profits which some of what may be called good times or bad times: few to no clients, few to no projects, no profits.
It is quite amazing, how clients from different businesses, sometimes from different countries may need the specific services and products provided by your company exactly at the same time, sometimes exactly during the same day. Funny enough they are all great clients and prioritizing may just get impossible; at times resulting in turning part of them down.
And out of the blue, without any “logical” reason none of your bids are successful, all of the potential clients start having other issues, like no money, or something happened in their life and need to postpone the project with your business.
Situations like this happen, and every now and then is almost like Murphy’s law. Yet when it happens to us, we may not feel like laughing on the irony.
Business people rarely talk about this topic. In real life, nobody prepares entrepreneurs for this “strange” reality. Running different businesses and working with clients on improving theirs I noticed how business cycles affect not only the business but its business owner as well.
Here are the 5 learnings:
- Whatever you do to get the results wanted may not pay back right away; but it will. Put it differently, your investment of time, energy, money will pay back; it is not because you do not have a new client this week or this month that the new client will not come along, as long as you keep working on improving your product and services to best answer clients’ needs. It is part of what we call time to market (not only the time to produce the product but also for the product to get noticed by potential clients).
- The time when new clients are not signed-in or current projects go on hold, is not necessary a bad time. It is an opportunity time. Because it means time. Time for doing highly important “activities” that due to daily operational routine may not get enough priority. This is when you may come out with new business ideas, or new strategy.
- The so cold good times busy times, when your business is making a lot of profits, may not be that good after all. Is definitely good for money, yet it may affect your health, your team, and overall may not encourage improvement. Why changing something that works…
- Having one single revenue line is too risky. Any business will take an average of 3 years to start producing real money, except some of zero cost-based consultancy where results may be faster. Even so when a period of “no new clients” is starting, if all results are based on the same profit line, that may translate in no money at all coming in. When you can’t have two business lines, at least have different price-based services to provide for different line of clients (small, medium and large for example).
- Whatever your business, save some money for bad times. On a personal note, I recommend having at least 6 months full expenses in a different savings account. Because when your business may go low, and it will, as every business goes to cycles, you may not be able to pay yourself a salary. Or not to the extend you use to. In those time, having some specific savings not only will get you through without a lot of worrying, but it will allow you to stay focused on the action plan to get back on track knowing for certain that: 1. Things will go back on track as this is what business cycles show, and 2. Till that time there is no need to worry as you are covered. The high advantage of not worrying about the future is that you spend your energy on the right places instead of consuming it on things that may be out of your control.
When start building businesses, some may simply look for fast results and easy money making. Real entrepreneurs do not dream: if this was easy, everyone will do it. They take actions and work hard.
They do not compare with others who have been on the journey for long enough to see results. Before they become big most successful people struggle through real moments of doubts, failures, sometime depression. Being an entrepreneur and running a successful business it is not just a walk in the park on a sunny day. Those low times will come and most probably more often than the good high moments.
How a business owner deals with the low cycle is important as study shows important personal impact on business people who identify themselves with their business.