What a Low Tide Can Show You About Your Business. Now that you're exposed, look for areas of opportunity to redefine your operation for sustainable success.

When the tide is high...

John F. Kennedy once said “a rising tide lifts all boats.” He was referring to the idea that a strong economy will benefit all participants. This is especially true when it comes to small businesses. 

We can easily see that when the economy is strong and consumer confidence is high, businesses have an easier time succeeding. During a strong economy, entrepreneurs start businesses and invest in growth. It is common to take risks (a synonym for investing in this context of building a business). You invest in growing your business by basing your decisions on recent historical trends and your best estimation of future trends. Facts are facts and nothing beats using recent history as the primary input for forecasting revenue growth and determining where to invest.

During strong economic growth, businesses are oriented toward keeping that upward trajectory going by investing in people, systems, infrastructure, innovation, etc. Many business owners borrow money to do this. They give up equity in the business or take on debt to cover the investments required to sustain the recent growth rate. During the growth phase, it is easy to become less disciplined when the business is moving along.

Areas often under scrutinized or deprioritized when the business is doing well include:

• Inventory turn rates
• Employee productivity
• Automation
• System scale
• Security
• Marketing ROI

​When revenue is increasing month over month, you might overlook a small dip in profitability. Maybe you're thinking it's not a big deal. After all, you're still making great money and things are cruising along.

Then something like a global pandemic hits and the tide rolls out... quickly. 

When the tide is low...

What do you see during a severe low tide at the beach? You might see mud, rocks, seaweed, shipwrecks, and all sorts of debris. The type of things you wouldn't normally see when the tide is high and water is covering it all up. Sometimes the stuff you see left on the beach isn't that pretty. During low economic tides, businesses become exposed like they may not have been previously. The not so pretty reality of ineffective employees, poor systems, lack of discipline, etc. gets exposed. Some business owners, along with their customers and investors, see the ugly side of the business for the first time. 

Of course, COVID-19 is more like a tsunami than your standard low tide. Even the most efficient businesses are getting stuck in the mud. Regardless, all businesses struggling with this pandemic are faced with the inefficiencies that exist and are no longer getting covered up by the high tide.

For the fortunate businesses that are able to survive the pandemic, now is the time to look at what part of your business washed up on the beach and was exposed during the low tide.

Headcount. Is each employee bringing the most value to the company? Are they the best fit for the position? Can you do more with less?

Inventory. Do you have too much inventory? If so, can you return it to the supplier? Put it on sale? Anything you can do to turn it into cash? Moving forward, how can you improve forecasting?

Marketing. Did you underinvest in marketing? Did you spend too much on marketing, never quantifying the results? Can you make smarter marketing spend decisions using data and analysis?

Sustainability. Were you more focused on revenue growth than profit margin and overall sustainability? Can you pivot and create new opportunities?

Safety Net. What are you going to do differently to build a safety net for your business? Just like emergency preparedness for wildfires, earthquakes, and other natural disasters, what plans can you make for securing your business?
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Once your business is stabilized and will remain afloat, focus on how you can restructure your business to be more efficient and ultimately, weatherproof. One thing is for certain, the high tide will return. And when it does, use the growth to build a stronger foundation that can withstand future storms.

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​​​Bill Ross is a business coach and consultant offering small business owners and entrepreneurs advice and support to help them achieve their goals. Learn More