Surviving a kick in the gut

Gut Kick The more I talk to entrepreneurs and business leaders, the more I realize that so many of us share similar experiences. A dear friend recently received a call from her largest client – they were considering cancelling their contract with her firm. Nice timing – happy holidays. The frustrating thing was that it was a political decision, not a financial one. Ugh. Bad news that makes sense is a lot easier to handle. Getting kicked in the gut over political positioning within a company can be unbearable.

Her dilemma brought to mind a similar experience I had several years ago when my largest client lowered an equally devastating boom. I was actually out of town meeting with this client when the fairly-new manager (and career politician within the company) took me out to lunch. Just as nice as can be, he said “We’re replacing your software with our company standard offering…but we’ll give you a great reference.” That’s like the dreaded I want to break up but we can still be friends.

This news was not a complete surprise to me. I had been part of the team evaluating our software against their corporate standard solution. The team had determined that the systems they were currently using (ours!) were better suited to their operations and switching offered no clear financial benefit, which is what made this so much more difficult. The verdict made no logical or financial sense.

In my friend’s situation, too, their program had recently won awards from the Chairman of the company and had documentation supporting it’s effectiveness. All of that didn’t matter – someone didn’t like it or didn’t get it. While it won’t be easy, this woman is one of the smartest people I know and I have no doubt she will come out on top. She might have to scale back and regroup a little, but she has what it takes to figure it out and weather the storm.

Every business experiences a gut-kick moment, potentially more so under current economic conditions. Knee jerk decisions are being made that don’t always make sense. But what do you do when things take a turn, other priorities take over, or politics trump logic? It is great to expect the unexpected but admittedly this sounds stupid because if you expect the unexpected then it’s not unexpected, right? However, there are things you can do to insulate your business from the unforeseen political and economic winds of change, such as:

Diversify. Over-reliance on one supplier, customer, channel, or a single industry, as those in the Telecom industry in 2001 can attest to, is risky business. Although it is critical that you start with a niche market and test customers, work hard to diversify your supply chain partners and clients as soon as practicable.

Get your contracts in writing. Too many small businesses forgo a contract and go on trust. Not a good idea.You need to make sure you and your company are protected by getting your agreement in writing so even if you have to renegotiate, you get expectations spelled out so you at least know your starting point.

Put cancellation clauses into your contracts. There should be a penalty for early cancellation. Customers won’t always pay it unless a lawyer gets involved, but it is worth a shot. And while you’re at it, if it is a service contract, make it renew automatically unless the client cancels it in writing. That way, you have a better chance of getting time and runway to make adjustments when things don’t work out.

Build deep relationships within an organization. Whenever possible, make a lot of friends and allies within your client, supplier, and distribution channel’s organizations. You never know when you’re going to need help or advice in dealing with your specific contract person. That person can also get promoted, take another job, or, heaven forbid, die. In my case, that is just what happened. One of my long-term client contacts (and good friends) passed away suddenly of a heart attack at the age of 48. Thankfully, we had a written contract and were able to build other personal connections within the organization to continue the relationship.

Maintain a private office. After all, you don’t want your employees or staff (or children) to see you crying or ranting, do you? My friend Terry maintains that this is why CEO’s should have their own office with adjoining bathroom if you can swing it. That way, you can pull yourself together after your little fit and go out smiling from your office.

Have you experienced a gut kick in business yet? If so, you’re not alone! It is unfortunately a part of the entrepreneurial and business roller coaster. How did you deal with it? Is there something you wish you had done before that would have made it easier? Please share!

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This entry was posted on Tuesday, December 9th, 2008 at 7:42 am and is filed under Business Growth, Entrepreneurship, business plan, business success secrets. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

3 Responses to “Surviving a kick in the gut”

bauch training says:

March 16, 2010 at 9:52 am

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Feel-Live says:

February 28, 2010 at 11:56 am

Thanks for your story!
from sarah@Florida dui attorneyFlorida dui attorney says:

December 30, 2009 at 7:32 pm

I have to agree – any type of business especially small ones cannot rely on trust no matter how close you think you are to them, or not matter how good you think your relationship is. Keep it legal, get a signature, get a contract, and you won’t get screwed over money in the end
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