Are you prepared for your business to change overnight?
If the facts don’t fit the theory, change the facts.
-Albert Einstein (1879-1955)
One of the advantages of being SOHO is that you’re small enough to make a quick U-turn. One look at the bloated bureaucracy of a company like GM (“Let’s kill that damn Oldsmobile ”) is that it takes too long to make changes in the way the company operates. SOHOers can make a complete circle in less time and space than a New Beetle. That’s the good news, but if you know me you know there must be some bad news too.
One of the insidious affects of success is complacency; the idea that the same amount of money you made last month will come in this month. Nothing could be further from the truth. Let’s start with business cycles: Every business has them, but that doesn’t mean you have to live with the situation. One successful local SOHO operation was busy six months a year and used the rest of the year to plan marketing strategies for the next cycle and take it easy. The owner had other ideas; she wanted to extend the busy seasons and looked for seasonal products and services to sell existing customers and maybe even a few new ones. The idea was built around low-cost, no brainer items. Within one business cycle, these new offerings had become a staple of the firm. These new products didn’t return the same per-unit profit as her regular work, but provided income at times when there was none. Along the way, she picked up a few new clients who liked the cheapies and came to her when they wanted to spend more.
One of the hardest changes you can deal with are those that come out of the blue, like an earthquake. One of my former photo studio’s main businesses was work for corporate meetings and conventions. When Colorado passed what came to be viewed as an anti-gay-rights amendment, the rest of the country responded with a boycott of the state. Already-booked conventions from Fortune 500 clients were canceled and moved to other states, leaving the studio without its main source of income. While ultimately the Colorado Supreme Court ruled the measure unconstitutional, there were more than two years when cashflow became critical.
What we did was based on some of the best advice I’d ever received: When my wife Mary and I were struggling in the early days of our business, our accountant, asked us. “What can you do right now to make some money?” Step one was to become more aggressive in collecting past-due invoices. Step two was to expand the services we offered. At a conference, we had heard a speaker talk about profits in school photography. Since we focused on working for corporations and large nonprofit organizations, we established a school photography DBA headed by Mary. While slow starting, the DBA became so successful that we were able to sell it (and make a few bucks) separately from our main business, and it remains–in the most basic of SOHO traditions–in the spare bedroom of our new house.
Change is inevitable; you must plan for it by being aware of what other directions you can take your company to survive.
While nobody every voted him on or off any island or Outback, contributing editor Joe Farace is a real survivor. As the author of 1060 magazine articles and 23 books, he attributes this to his planning for the best, but expecting the worst.