I recently spoke with an entrepreneur whose business is falling off due to the pandemic. He’s starting to see about a 25% drop in customers and revenue. We talked about rightsizing to avoid unprofitability.
We categorized each of his expenses as fixed or variable. Most of the latter should decrease effortlessly because he’ll be using products and services less. I encouraged him to try to reduce fixed expenses by proactively contacting the people he’s paying and letting them know his situation. He told me he’s begun doing this and has been able to negotiate some savings—most notably, a 40% reduction in rent for the next few months. It turned out that his landlord appreciated the proactive communication and wants to keep him as a tenant. No doubt it helped that the entrepreneur has paid on time for five years and rent payments aren’t the landlord’s primary income.
My big takeaway from this conversation is that proactive communication is powerful. He didn’t procrastinate until things became dire. He acknowledged what’s happening, came up with helpful ideas, and openly discussed the problem with other people it affects. The upshot was an amicable win–win resolution that will help his business survive the downturn and avoid disasters like bankruptcy and lawsuits.
I encourage anyone navigating rough waters to look reality in the face and communicate honestly with other stakeholders sooner rather than later. What you don’t ask for, you won’t get.
How has proactive communication kept you from running aground?