I am a business consultant for small and medium Greek businesses, which are really suffering an amazing crisis. I would like to continue my business coaching, but I need some advice for my clients as to what they can do in this environment. What can I advise in these cases? —C.S., Athens
On first glance—and probably second and third—you would appear to be in a bleak position. How does a coach advise small business owners who are likely facing the worst economic crisis of their lives?
Considering the reality of crippling government debt and austerity measures, it’s unlikely that your clients will benefit from any kind of economic stimulus plan, tax incentives, or bailouts, says Philip Moorcroft, chief executive of MGPS.com, a Toronto management consulting company. You can combine that with what are likely to be ongoing bank failures, layoffs, and reduced consumer spending for the foreseeable future.
What to do? You could fold up your tent and wallow in the bad news. Or you could realize that this moment is exactly when your small business clients need you the most—and see it as an opportunity to truly prove your worth as a consultant. “If you accept the sense that Greece is doomed, that would be like your clients having depression and going to a depressed psychiatrist. The goal of a business adviser is to find opportunities that others don’t see,” says Mark Stevens, chief executive officer of MSCO.com, a marketing and business-management company based in Rye Brook, N.Y.
Start with a bold, honest assessment of your clients’ financial situations. Help them come up with a worst-case scenario for their businesses and a realistic plan they could use to survive it. Even if they never have to use those plans, they will come out of the crisis stronger for having developed them, Stevens says.
You don’t want to give them false hope, but it’s O.K. to remind them that even if the worst happens, life will go on and business activity will not cease entirely. “We think back on our own Great Depression and as bad as that was, not every American was unemployed and suffering. Some people were still buying shoes and going on vacations,” Stevens says.
The goal for most of your clients will be weathering this storm and being smart and strong enough to seize opportunities as their competitors flounder, Moorcroft says. Your goal should be to walk alongside them and help them get set to ramp up quickly as they emerge from the tunnel, as most—though not all—inevitably will.
Most small companies get through tough periods by cutting costs. That does not have to mean layoffs, although it might. Go through your clients’ balance sheets line-by-line, Moorcroft recommends, and help them identify overlooked places they can cut back. “Get rid of nice-to-have-but-unnecessary goods and services. Reduce your usage of necessary items as much as possible and switch to cheaper alternatives where you can,” he says.
Many businesses operating in flush times let indirect costs such as overhead get out of hand. These areas are easiest to trim because quality is less essential in areas that are not directly tied to a company’s products and sales. This means your small business clients should look to renegotiate with suppliers, contractors, and landlords. If they must, they should level with these people and let them know that they will either have to terminate their contracts or get a better price. “This is risky because a weak customer could make a supplier nervous,” Moorcroft says. Still, relationships that survive a period like this often become stronger as accommodations cement loyalty that can last for decades, he says.
Don’t forget to work with your clients to position them for a rebounding economy, whenever that happens. If they don’t have marketing plans, now is the time to create them—even if they can’t be funded this year or next. At some point, they will become useful, says Stevens. “True excellence in business management is to get a bigger piece of a shrinking pie. I hate when clients come to me and say: ‘My problems are recession-driven.’ You can’t govern your business by macroeconomics or the state of the euro,” he says. “Even lousy businesses do well in flourishing times. Really great businesses do well in lousy times, too.”