The One-Two Punch That Made My Company Stronger
It’s 28 February 2001. I’m on the phone with our health insurance broker, following up on some important coverage details. It’s a great time in my organization’s life: We just finished a US$100,000 buildout of our second location and our 32 employees are as busy as can be. Then the ground begins to shake. We’re having an earthquake, I tell the broker. She can feel it 40 miles away.
I hang up the phone, get under my desk and yell for everyone else to do the same— it’s a big one. The floor beneath us ripples and rolls like water, and the rumbling seems to go on forever. A crack in our concrete floor forms and runs down the length of the building. Our bookcases and computers are falling, and it’s incredibly noisy. And then before we know it, it’s over.
We’re all stunned. Our intern, an ex-fireman, knows just what to do: He gets us out of the building as fast as possible. We look across the street at Starbucks’ headquarters, where windows have exploded and the mermaid clock tower has fallen to the ground.
We’re all OK, but we’re literally and figuratively shaken by the 6.8-magnitude earthquake. My business wasn’t prepared for such an event, and had things been worse, we might not have been able to recover from the ensuing trauma. That was the first punch.
The second punch to my business’s gut happened seven months later after the 9/11 terrorist attacks. Along with the emotional shock the nation felt, normal business stopped, too. Like with most business owners, this tragedy forced me to assess the health of my business and prepare for the economic struggles that would unfold.
Because I’m an optimist, thinking the turnaround was just around the corner, I did my layoffs too slowly and went deep into my line of credit. Ultimately, we had three rounds of layoffs, had to buy out our now-useless second office’s lease and went US$100,000 in debt.
But despite these calamities, a lot of good came out of these dark times. When the high technology market went away, we turned our healthcare IT expertise into a specialty, which is a bright spot in the current economy. We also whittled our team down to a very strong core— a side effect of the layoffs. Finally, we learned deep lessons about managing in hard times that have helped us avoid additional layoffs.
Key among these lessons is to respond to downturns quickly, a lesson we have been adamantly applying since the one-two punch. Now, instead of waiting until we max out our line of credit, at the first sign of faltering billings we get our team together to figure out our new goals and how to meet them. We also bank our bonuses instead of spending them, just in case we need them later. Finally, we have instituted across the board temporary salary reductions of 15 percent. We also started a best practice of calling for accounts receivables on day 31. Together, these decisions have enabled us to survive unexpected business earthquakes.
Another lesson we learned is to never stop innovating. Like our successful foray into the healthcare industry, we’re growing our products and services in two new areas as a result of the economic downturn. This diversification will broaden our new business targets and offerings, which will help when times get tough down the road.
For now, I’m happy to admit that we’re well poised for any uptick in business. We have low overhead, a strong team, no debt and new lines of business. As it turns out, these business crises made us a stronger, more unified company. Such is the legacy of hard times!