“For things to remain the same, everything must change.”
This celebrated quotation from The Leopard by Giuseppe Tomasi di Lampedusa contains the essence of his story and serves as a cogent narrative for our time. Set against a backdrop of upheaval, adaption, and survival it could not be more relevant for our world today.
We founded our company RiechesBaird – the joined surnames of the two founders – in 1994 shortly after the Gulf War. We saw the dot.com boom and bust; the national trauma of September 11, 2001; the collapse of energy giant Enron shortly after, with the financial havoc it wreaked.
As a small business, we have learned to adapt to change over the years in order to survive difficult times. We learned there is always opportunity in volatility. We made it our goal to emerge from each crisis positioned to win in the new long-term reality. That goal shifted our mindset from defense to offense, from negative to positive.
The stock market crash of 2008 and the Great Recession was different. It was extended, painful and more frightening. Bank failures, TARP program and the precariousness of the global financial system caused real fear.
But we survived again, and eventually we came back even stronger. Yes, we had to take serious action to balance our financial situation. But instead of slashing costs to get smaller, we knew the importance of keeping clients close and our people even closer.
We asked ourselves two seminal questions: How do we think the market comes back? And are we in the right business to be successful in that market?
The coronavirus crisis of 2020 is not just another crisis. It’s a game-changer. We have heard that in unison from clients both local and international. The question is not if the market will come back, but how and when.
This year also marks our 25th anniversary in business. By any measure, that’s no mean feat. According to JPMorgan Chase, roughly a third of new businesses close within their first two years, and half exit within their first five years.
To mark the occasion, we were thinking of practical ways of passing on the wisdom we have accumulated over 25 years for the benefit of other companies.
We knew the 11-year bull market had to end. We didn’t know how, but we can tell you with absolute certainty we didn’t see COVID-19 coming. No one did.
This kind of situation is new to the majority of small businesses – 51 percent were established after the last recession, so they are 10 years old or less. And 32 percent of small businesses are 5 years old or less. They have enjoyed unprecedented economic growth in the extended bull market. Good times was their normal. This is a quick and brutal punch to the gut.
Yes, the immediate task is survival. But it’s not just a question of the short-term survival; it’s as much if not more so a question of long-term viability. The driving imperative is how to position your business for future success.
It involves a one-two step. You must do both to survive.
A Two-Step Business Survival Process During Crises
Step One: Cut fat, not muscle
Short-term survival starts with an estimate of what it takes to continue to do business in the short term along different scenarios of reduced revenue. Cost reduction calculations are made to match those scenarios.
Your place in the new reality is likely to be heavily influenced by how you handle this step. Cut fat, not muscle. Keep your clients close and your key people even closer. You do not want to survive the crisis only to find yourself without the resources to meet changed client needs.
Step Two: Position for the future
Step two is hand-in-glove with step one – consider the services you offer and the markets you serve against the likely reality of post-crisis. For example, start looking for adjacencies in both services and markets where opportunity may be less impaired.
You might come to the conclusion that your business would be better served by a different model entirely. Be open to radical ideas and where you can deliver more value as the market shifts. Disrupt yourself.
This approach served us well in 2008 and the immediate financial aftermath in 2009 and 2010. We saw the writing on the wall for agency business. The advertising and marketing game was changing. Clients were not only cutting budgets, but were reviewing their longer-term needs against the emerging digital revolution. The large holding companies were also swooping in for business they had previously ignored.
Our challenge was not just a matter of survival with short-term cost and cash flow management. More critically, we had to decide what business we should be in for the long term, place our bets accordingly, and be prepared to let go of our old business model.
An evaluation of our client base gave us the insight we needed. What certain clients needed and were willing to pay for was research and brand strategy as they, too, adjusted. Our investment was switched to a new business model of higher value brand consulting, and away from traditional marketing and advertising.
To reinforce our commitment to the future, we did what we advise our clients to do: We later positioned our brand to align with our business strategy and stay relevant. Our new name – BrandingBusiness – emphatically proclaimed our commitment to B2B brand strategy and consulting.
It wasn’t easy at the time. Good people had to go, but we knew it was the right step to take. Today, BrandingBusiness is a global brand consultancy with several Fortune 500 clients.
Decide to Win
Each retrenchment changes some fundamentals of business. The competitive landscape will have changed — old winners will be losers, and new winners will come out of nowhere.
This temporary period of enforced, remote working and living for most of the world will change things permanently. The convergence of a disruptive force with the availability of technological tools will create new ways of thinking about work and open up business opportunities.
You cannot control the world around you, but you can control how you respond, how you lead, how you lift others and—if your business survives—you may well be facing a better, unimagined future.
What’s next for BrandingBusiness? We are working on it.
“You can’t go back to the beginning, but you can start where you are and change the ending.”