The stock market is at all-time highs.
Everywhere you look, you see the signs of money.
Cranes at construction sites, new apartments, and houses being built on just about every vacant lot.
There isn’t a single economist on the planet who thinks this will last forever.
A market downturn is coming, and when it does, if you are not prepared, it can destroy your business, your finances and send you into bankruptcy.
Don’t think it can happen to you?
Nearly 4 million people filed for bankruptcy from 2008 through 2010.
During the same period of time, 161,000 businesses filed for bankruptcy.
The statistic we don’t have is how many entrepreneurs closed their doors without filing for bankruptcy protection.
This often happens, especially when all the corporate debt is personally guaranteed by the owner(s).
The good news is that I believe there is time to take action and set your business up to thrive in the next downturn, but first, you need to ask yourself if you are willing to prepare for the inevitable.
Are you prepared if the market turns against you in the next few years?
Whether your business is doing well right now, or you are struggling, I am going to show you what you can do to assure you won’t be a statistic when the downturn happens.
I’m not going to get religious I promise but in the Bible in the book of Matthew chapter 7 verses 24-27 Jesus tells a story of a wise man and a fool and it really applies to this discussion.
“Everyone then who hears these words of mine and does them will be like a wise man who built his house on the rock. And the rain fell, and the floods came, and the winds blew and beat on that house, but it did not fall, because it had been founded on the rock. And everyone who hears these words of mine and does not do them will be like a foolish man who built his house on the sand. And the rain fell, and the floods came, and the winds blew and beat against that house, and it fell, and great was the fall of it.”
The point being, you want to build your house before the rain comes because the rains of life will come and how you prepare for them will determine if you sink or swim during the storm.
Let’s look at 5 things that you can do to thrive in the storm.
- Create Marketing Materials That Attract New Clients and Retain Existing Clients.
All too often money is spent to make your website look pretty, your brochures very graphically appealing but very little thought, or money, goes into the most crucial aspect of marketing…
Your marketing message must be clear, concise, and it must assure your prospects and clients that you can solve their problem or make their lives better and that you are an expert at what you do.
There are two ways to do this, hire a professional copywriter, or become proficient at it yourself.
Don’t take this step lightly, there is a reason I put it first.
If you think you can generate sales by telling people about your features and specifications, you will find out very quickly in a downturn, you will be forced to sell at the lowest price which never works.
- Communicate With Your Existing Clients and Prospects Regularly.
At a minimum, communicate with them every week.
Of course, if you have hundreds or thousands of clients, it’s improbable for you to do that by picking up the phone and talking to them, but you can communicate via email, snail mail, videos, audios or text.
All of which can be fully automated, or should I say, should be fully automated.
Automation is the key to scalability, and scalability is the key to freedom.
You may be asking yourself what you would say to them that often?
People do business with others that they like and trust, so communication is about building and solidifying your relationship with your clients and prospects.
You want to bond with them and to do this, you will want to talk to them about what you believe, spell out your vision and how it helps them solve their problems or makes their lives better.
You will want to talk to them about yours and their transformation, what you are becoming, or what they are becoming.
You can do this with helpful tips for them to read or watch or by creating content like I am doing in this post.
I’m trying to help you become financially stable in case of a market downturn, and it just so happens that I am trying to be financially stable in a downturn as well.
Talk to your clients and prospects about new products you have that will solve their problem or make their lives better.
Don’t make them ask.
By letting them know you have other solutions to problems they may have when the timing is right they can buy from you.
This is why automation is so crucial because it assures that you will be there when the timing is right for them.
Lastly, don’t be afraid to be polarizing.
There is nothing wrong with repelling the wrong clients and prospects.
When I say “wrong,” I mean people that would not be an ideal fit for your business.
Nike’s, Phil Knight stood by Tiger Woods when he went through his personal crash and burn.
This event was enormously polarizing, and many people hated Nike for not firing Woods.
But Knight trusted Woods and Nike knew who their clients were.
Knight and Nike were confident their clients would stick with them, and they also knew they would repel client who wasn’t a good fit.
This year, when Tiger won the Master’s Tournament, Phil Knight’s net worth rose by over 250 million in a single week. It’s ok to be polarizing provided it’s something you believe in deeply, your clients will bond with you for being yourself.
- Get a Consistent Flow of Incoming, Prequalified Leads.
If you perform well on creating compelling marketing materials, that make your products and services irresistible to your ideal prospects, and clients and you communicate with them regularly incoming prequalified leads are sure to follow.
Build systems around turning your leads into customers.
This is the most essential aspect of your business.
There are only two reasons a company will fail, not enough customers and too much debt and if you can create a constant stream of incoming leads which turns them into customers, you will have no problem eliminating your debts.
The time to do this is not when it begins to rain, do this now.
If you don’t know where to start, get some help.
This is critical to surviving and thriving in the next downturn.
- Isolate profit.
This may sound simple, but most business owners don’t have more than one week’s worth of profit saved for a rainy day.
Mike Michalowicz has a great book on the subject titled Profit First.
You are in business, for one thing, profitability.
You need to take a percentage (start with any percentage) of every sale and isolate it.
Open a separate savings account for your company.
Make sure the account is not linked electronically to your checking account or any other account.
When you make a sale or on a weekly basis, write a check and deposit it in this savings account and do not under any circumstances touch it.
Make it hard to get at this money.
I prefer that you have to physically go to the bank to make a withdraw.
- Eliminate Debt.
On a quarterly basis, pay yourself and the other owners a bonus out of your profit savings account.
I usually break it down as follows: 25% of what’s in the account for the owners, 50% to pay down debt and 25% remains for reserve.
Once all debt is eliminated the split becomes 50/50 until you have at least 6 months of reserves in cash.
These 5 steps work 100% of the time if you implement them before it’s too late.
But you have to take action.
Imagine how you will feel when your company is prepared for the coming rains.
Imagine the feeling of safety and peace, knowing that you can make it through the toughest of time.
Imagine how your employees will feel knowing their boss is focused on assuring them that their job will be secure through any economy.
Do you think people will stick with your company when they know you have their best interest in mind?
I should think so.
So what should you do next?
Get started now. Don’t wait for the rain to begin.
When was the best time to start implementing your plan?
When is the next best time to start? Right now.
I created an easy to follow checklist to help you implement your plan.
If you don’t know where to start get some help.
I can guide you in what you need to do.
Most entrepreneurs can make their company bulletproof with the right guidance.
If you want some guidance, let’s have a discussion to see what steps you should take first.
To schedule a call with me click here.