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About This Episode

The market always evolves. While the pandemic has created additional financial pressure for most businesses, it also rendered some business models obsolete or struggling to hold on while serving a shrinking market. 

 

In this episode, we’ll talk about how to navigate a significant loss in revenue so your business can survive and soon return to the place where it thrives.

1. Make adjustments quickly when you start losing revenue.

Don’t overreact and make drastic changes based on one bad month, but do make sure you’re making the small changes that might save you a lot of heartache in the long run. Take a look at what you can cut back on or readjust easily without affecting your people.

2. When revenue drops and looks to continue on that trend, it might be time to pivot.

Take a look at how the construction industry pivoted in 2008, or how the restaurant industry embraced takeout during the 2020 pandemic. To survive, you might need a new product or outlet. Be willing to research the possibilities and take that risk.

3. The people who helped you get to where you are now might not be the people who help you get to the next season.

And there’s nothing wrong with that! Sometimes, it just makes more sense for both parties to move on. There’s no hard feelings and nothing to be ashamed of – it’s just a new season. Don’t let an irrational sense of loyalty cause you to eventually do harm to your business and employees. 

How has your business survived 2020? Have you had a loss of revenue and what changes have you had to make?
What are some changes, from an employee standpoint, that you’ve had to make overtime that was for the better, even if it hurt at the time? Don’t name names!
What does your savings account look like at the moment? What could you do to make it stronger, in case a revenue downturn occurs?

Being a good steward of your business means that you have a good plan B.

Lisa Zeeveld

It's easier to add to a business than to subtract from a business.

Tricia Sciortino

Having a very strong savings account is a great way to leverage a downturn.

Lisa Zeeveld

Don't keep people around that can't move your business forward.

Lisa Zeeveld

We are all in business to be in business.

Tricia Sciortino

Tricia Sciortino on Instagram and LinkedIn.

Lisa Zeeveld on Instagram and LinkedIn

BELAY’S Managing Remote Teams Course

(02:00) Lisa talks about one of the hardest situations she’s had to lead a team through. 

(04:12) Take a conservative approach when forecasting and projecting revenue. 

(04:57) What’s the first thing you should do when you realizing your business is declining?

(06:57) One down month does not beget a trend. Don’t panic and overcorrect. 

(07:53) Lisa talks about some of the first things they did when they realized they were going to lose revenue over a long period of time during the pandemic. 

(14:00) Having a strong savings account or getting a short-term line of credit is a great way to leverage a downturn.

(15:56) Being a good steward of your business means you have a good plan B to take care of your employees if there’s is downturn or missed opportunity. 

(16:56) If you really believe this is going to be long-term, then it’s time for your business to pivot. 

(19:25) Make adjustments quickly when things start to not go your way. Acting fast saves a lot of heartache later on. Don’t overcorrect but timeliness is important. 

(21:38) Having the right people on the right seat on the bus with new or interesting roles can absolutely change your organization’s trajectory.

(22:33) The people who helped you get to where you are now might not be the people who help you get to the next season. 

(23:17) As a CEO, how does Tricia balance caring and building trust while also casting vision and making decisions that people won’t always understand. 

(25:50) This episode’s one next step: Spend some time today or this week reflecting, asking questions, and seeing if there’s anything you need to do now to protect your business in the future.

Lisa Zeeveld:

I think it’s good to note too, that if you are looking out six months and you don’t think that your business is going to improve in that six months, it’s usually because of the economy. Because there’s got to be other levers. If everything is going great and the economy is growing and your business is declining, that’s a whole other separate conversation.

Speaker 2:

Welcome to One Next Step, the most practical business podcast in the world, helping you get more done, grow your business, and lead your team with confidence with tips and tools you didn’t get in business school. Here are your hosts, Tricia Sciortino and Lisa Zeeveld.

Tricia Sciortino:

Welcome to One Next Step. I’m Tricia, CEO of BELAY.

Lisa Zeeveld:

Hey, guys. I’m Lisa, COO of BELAY. Tricia and I have learned a lot along the way. So for the One Next Step, we want to bring you episodes filled with excellent content. One Next Step is here to help you on your leadership journey, to help you run your business so you can also enjoy your work and your life. The hardest thing about running your business is the unknowns. Will the business succeed? What hardships will we experience? Will I have to sacrifice in other areas of my life to be successful?

Tricia Sciortino:

Yeah, those are all good questions we ask ourselves. And we’ve asked ourselves the same questions, honestly.

Lisa Zeeveld:

Yeah.

Tricia Sciortino:

It’s risky. But yet it’s so rewarding. It comes with great times and challenging times, you take the good, and you take the bad. And the good times, those are the easy times to manage. But how do you manage the hard times in business? One of the most common hardships businesses will encounter, of course, is loss in revenue. And 2020 was definitely one of those years, where most businesses, one way or another, had to suffer through what it meant to lose revenue. So now that we’re on the other side of that, let’s talk a little bit about what that means. So we know leading a business is equal parts exhilaration and challenge. But as we jump into the topic, LZ, I’d love to hear from you what is one of the hardest situations you’ve had to help lead a team through?

Lisa Zeeveld:

Yeah. Finances always one of those hard things to discuss. The more that I talk to other business owners, especially new business owners, there’s almost this shame around the unknown. It’s a lot of times what they don’t teach you in school. I like to tell people that you might go through a couple of classes, if you become a dentist that talks about business, maybe you’re an architect, they throw in a couple of things to tell you how to run a business. But there’s really no classes that teach you truly how to run this business in a way that ends up being profitable, and that you yourself can actually get a paycheck. And so I love that we’re going to dive into this.

Lisa Zeeveld:

I think for me it is forecasting your revenue. That has definitely been a challenge, especially in current times, the pandemic and what has happened. But there’s been other times outside of the pandemic, when we had forecasted our revenue larger than we received. And that was a problem, because we had also forecasted expenses around that hypothetical revenue. And it didn’t match up. And math is pretty simple. I love math, because it’s always two plus two is going to equal four. So if your revenue was two and your expenses are four, then you have a negative two. And so that to me is definitely the hardest area, is when your revenue just doesn’t come in where you need it to be. And you’re short, and you don’t know really what to do. And so I hope our conversation today can really dive into some ways that we’ve learned, trial and error, on how to help your business navigate that concern.

Tricia Sciortino:

Yeah, absolutely. We have certainly learned a lesson or two about even how we forecast. I know, that’s not necessarily what we’re going to dive into. We’ll definitely get into some more practical how-tos. But I know for you and I, when we’re projecting and forecasting revenue and expenses now, we take a very conservative approach. Because it’s easier to add to a business than to subtract from a business. So we have always, for the last few years, really sat in a place where we know we want to be conservative, even if it seems like it’s below trend, but that’s on purpose. So that’s been a great theory for us to follow along as we especially in uncertain times.

Tricia Sciortino:

So if we get into the practicalness of how to, so we can almost use this past year as a great example to talk through this. So first steps. Okay. Where we suffer a loss, for all intents and purposes today, we’re going to say, “Okay, the economy took a sharp turn down. Right now, it’s because of a pandemic,” it could be other reasons in the future, and your business is declining. So what are the first things we do?

Lisa Zeeveld:

Yeah. I mean, I think that if you see your business declining, and it’s not short term like, it’s not just one month. And it’s typically going to be you can find a reason for it. So maybe you did not have the revenue that you wanted for one month. And you’re like, “Okay, I’ve got some expenses, I can’t pay. What do I do?” Really, at that point, if it happens in the moment, you want to reach out to your vendors, and you want to find out what immediately you can get terms on. So there’s a lot of things, little FYI, for you guys. Not everybody pays their bills immediately.

Lisa Zeeveld:

A lot of times your invoices, maybe even your invoices that you’re sending to your clients have terms on them. 30, 60, 90, everybody wants to get paid. And so if you make a phone call and go, “Hey, I love the service you’re offering. Unfortunately, my revenue didn’t get to where I needed it to this month. Can I have a 60 day term on this?” They’d much rather work with you than never see the money. So if it’s an immediate decline in your revenue, think about what expenses you can not pay, and there’s some things that you don’t want to do.

Tricia Sciortino:

Delay.

Lisa Zeeveld:

Delay. And then if you are already on the hook, because they’ve already performed the service, or you’ve already received the product, then see if there are ways that you can divide up the payments to them by using terms.

Tricia Sciortino:

Yeah. That’s a great first step to make if you’re in a deficit from revenue as an organization. Okay. So I like how you talked about the super short term. And I think all of this goes without saying that we also need to be mindful that one down month does not beget a trend. So we’ve been in that seat before, where we’re, “Oh, no. Woe was me. We have one bad month.” Sometimes to your point LZ, one down month is just one down month. And it could be seasonal, it could be because you don’t do great business in the summer. So I think, first and foremost, not overcorrecting if you have one down month. And look for the little ways, like you mentioned, that you can get back on top of things.

Tricia Sciortino:

But let’s say that is not the case, that there is a reason to believe we will be having down months, for example, the pandemic where people knew pretty early into March and April that this was going to take a longer term toll. And so they were really going to have to do a total realignment of their revenue and expenses. So I know the process we went through. But I’d love for you to share with our listeners some of the first things we did when we knew, this is not just a one-month thing, we actually have to do a readjustment because we’re going to continue to lose revenue first season right here.

Lisa Zeeveld:

Yeah. And I think it’s good to note too, that if you are looking out six months, and you don’t think that your business is going to improve in that six months, it’s usually because of the economy. Because there’s got to be other levers. If everything is going great, and the economy is growing and your business is declining, that’s a whole other separate conversation. Because then you might need additional marketing support, maybe you don’t have the right people in your organization, maybe you are missing a particular opportunity. So I think that, yes, long term decreases in your revenue are usually things that are outside of your control, like an economic downturn.

Lisa Zeeveld:

I think about the real estate and construction market back in 2008. My husband at that time owned a small architectural firm. We felt it. We knew that business… It was like one day we had business, the next day we didn’t. The same way that the pandemic did. And so if you know that the market is not going to recover quickly, then yeah, I mean, you are completely re-forecasting. And that’s what we did. You and I sat down. It’s so fresh. It’s so fresh.

Tricia Sciortino:

We did. Sweatshirts and ponytails and yoga pants, and we ripped apart our budget.

Lisa Zeeveld:

We did. And we said realistically, what happens if half of these clients don’t come back, Where do we need to cut expenses at? And then it was, first and foremost, we talk a lot about culture on this podcast. We love our team, we want to celebrate our team. Unfortunately, it was more important that they were able to keep their jobs. And so any of the extra things, we cut. Any of the events, it was done. Fortunately, the pandemic also helped because it just wasn’t that we were being the bad guys.

Tricia Sciortino:

We couldn’t have events anyway. We couldn’t have an event and we couldn’t go to event and we couldn’t travel. So it was easy to cut those costs right out the gate.

Lisa Zeeveld:

I mean, not easy, but at least we didn’t look like the bad guys, right?

Tricia Sciortino:

We didn’t want to not have those things.

Lisa Zeeveld:

Yeah. So definitely cutting the events and anything that was more of like a nice to have. And then next stop was any new hires, we wanted to keep the people we had too.

Tricia Sciortino:

Hiring freeze. Yeah, we instituted a pretty immediate hiring freeze.

Lisa Zeeveld:

And that was tough too. The good thing is, again, it was an economic downturn. And so it wasn’t like we had a hiring freeze and lots of work for people to do. So again, that’s a pretty easy one to tackle at that point. And then from there was looking at anything that we had on subscription that we might not need at that same volume. So do we need the same amount of users for an IT application, was that? No, we probably don’t need that. There were certain equipment that we had on the docket to buy. No, we don’t really need to buy that equipment anymore. Okay, that’s pretty easy.

Lisa Zeeveld:

And then also too is look at any upcoming increases in your employee burden costs. So for us, we knew that we had team members that were slated for an annual increase. And we also had to freeze that too. And so those are some pretty easy, very top of the line, things that you can look at immediately to do while still making sure that you’re able to keep your current team members employed, and trying to boost morale at the same time that you’re doing these things, to keep the business running, and that we’re all going to have our heads down so that hopefully on the other side of this, we can get back all the things that we love.

Tricia Sciortino:

Yeah. And I think one of the processes we went through that I think was super helpful is, we tried the best we could to reforecast anticipated revenue, so we knew how much we had to cut. So we said, okay, if all things remain the same for the next three months, our revenue would be X, Y, and Z. Therefore, based on math, we would need to cut this amount of expenses. And then to your point, we took them for those areas. But it also helped us not over cut. And it also helped us put in place a plan B where we were able to say, okay, based on the current, what we think is going to happen, we’re going to cut these things. However, if it continues or is worse, there’s these other things that are like the backup plan, the plan B if you will, of what we might need to remove so that we would still remain in the positive as an organization. So that was super helpful, because we knew and we were able to share that with our leadership team to say, “Hey, guys. This is where we’re at. If this does not rebound, this is where we’re going to have to go.” So we really did have like a future worst-case-scenario plan in place, which I think having that worst-case-scenario plan in place is a great move anyway.

Tricia Sciortino:

To manage remote teams successfully one crucial factor is non-negotiable no amount of technology or autonomy can replace the impact of having an effective emotionally intelligent leader. That’s exactly why BELAY created its managing remote teams course. And in case you didn’t know, we have been 100% remote for 10 years. So it’s a proven blueprint to develop thriving employees because that’s how we’ve coached our team.

Lisa Zeeveld:

Absolutely. When teams are dispersed, productivity does not have to wane, culture does not have to suffer and employee engagement does not have to dwindle. In fact, they can all thrive and you can have fun too. Successful remote teams are possible, and this course shows you how. Ready to dig in? Get started by visiting belaysolutions.com\managing-remote-teams today.

Lisa Zeeveld:

I think that we would be remiss if we didn’t talk about that having a very strong savings account is a great way to leverage a downturn so that maybe you might know that the downturn is only a couple of months. Maybe it was just that you didn’t get the contract that you wanted. And so you really do see this as a two-month blip. You’ve got another big contract that you just put in, you really think you’re going to get that one. So maybe leaning into your savings account or going to your local bank and getting a line of credit, is another good way. Now, I do not recommend using credit, long term because that’ll just get you in trouble. But for the shorter term, losses of revenue, leveraging your savings and of course, that’s even a different conversation of how to build a savings, but if you have one leveraging that, and then leveraging a line of credit can help you get through too. But ultimately you got to be able to cut expenses, and reforecast a little bit to stay in business during the short term.

Tricia Sciortino:

Yeah. Well, and I think like you said about savings, it’s just how you would treat your personal life, how you would treat your life is the same way you should treat your business. You want to have a backup fund, you want to having a savings account. You want to have like six months salary saved in case you’re unemployed or lose. You want to be able to sustain if you have life changing events personally, and I think the same goes for business. Especially now that we’ve learned a thing or two about how the world and the economy is working, it behooves every organization to think through what is the savings plan we can put in place, so that if we ever need it, we have access to keep ourselves afloat.

Lisa Zeeveld:

Yeah. Because at the end of the day, anybody who’s a business owner wants to keep their employees employed. Nobody, I’ve never, in my time in business met a business owner who just can’t wait to fire people. And so you want to keep them employed, because that ultimately, they have families and they have obligations. And so being a good steward of your business means that you have a good plan B, good backup plan, to take care of them if there is a downturn, if there’s a missed opportunity, that you need to be able to keep paying them and keep looking for new business.

Tricia Sciortino:

Yes. And then in the longer term, luckily, we did not have to implement any of the things because we did rebound as an organization past the downturn last spring. But we did have a plan in place, like what was going to happen if it was longer term. And some of that did mean, potentially some of our employees going part time. And what we wanted to do was avoid laying anybody off, but not to the point where that was actually completely unrealistic where we didn’t have work for people. So part of the plan B emergency plan was, if we had to who could go part time, if we had to, whose job or function is literally no longer necessary, not that we ever wanted to get there, but we knew if we had to, we did have a contingency plan set in place.

Lisa Zeeveld:

Yeah. When I think if you really believe this is going to be long term, then it’s time for your business to pivot. No business can go 12, 18 months, losing revenues month, after month, after month. That’s the opportunity where you need to look for a different service line, you need to look for a different product, you need to start repositioning your business in another area that’s not declining. And so I think that having that ace in your back pocket too to say, “The pandemic, here we are, we’re almost a year into it. And I’m a restaurateur, and I still can’t have the same volume of people come in my restaurant. So now I’m going to look at takeout.”

Tricia Sciortino:

Takeout all day long. We need drivers, it changes the way you do business.

Lisa Zeeveld:

Exactly. And maybe there were certain dishes, menu items that you had not added, but you know that you’ve got a fellow restaurant tour down the road who used to be great at selling burgers, and unfortunately, they couldn’t eat their doors open. Now there’s a gap in your community to create a hamburger. Maybe that becomes where you can add some additional revenue. And so I think that long term, it’s not only about cutting expenses, but it’s about reevaluating what types of products and services you’re offering so that you can increase your revenue.

Lisa Zeeveld:

And I think again, back in 2008, when there was the housing crisis and construction and architecture was really falling by the wayside, I mean, that’s when they had to get really creative, and consulting services became a thing. It became more about, that’s when a lot of them were buying up homes and buying up property, so that they could keep that in their portfolio. Because they knew it wasn’t going to stay that way forever. And there was an opportunity. But you got to get creative. You can’t just sit back and wait for things to turn around. You always have to be proactive.

Tricia Sciortino:

I think to your point, you really can only sit in that season for a short amount of time. Before you do, literally, you’re bankrupt or you’re you’re running out of business, you can’t run a negative-producing organization for very long. So I think it’s great advice for anybody out there who’s seeing a downtrend for any extended period of time that, it is time to rethink. And you don’t want to wait too long, where you’re so far past the point of recovery. So I think being swift yet mindful, is really important. One of the things that we practiced that worked for us is that, we were very quick to make adjustments when things started not going our way financially as an organization.

Tricia Sciortino:

And I think because we were able to act fast, that we were able to save a lot of heartache later on, because we did pivot very quickly. And sometimes it can be hard to make those fast and hard decisions, but sometimes it’s really necessary. And I think as long as you’re not overcorrecting and throwing the baby out with the bathwater, it’s wise to also understand that timeliness in all of these kinds of things are really, really important.

Lisa Zeeveld:

Yeah. And I think it’s also worth mentioning that, we’ve focused on the pandemic, economic choices or perhaps you are in a business that there’s a lot of competitors, and so you feel that a lot of competition, your revenues are going down. But you could also have a leadership problem. And this is something that happened in BELAY. We had a leader, we saw that our business was changing, and why is this happening? And we had to make some swift moves there too, in the short term. And so I think that’s something also not to be overlooked as that, in large corporations do this all the time, because they have shareholders to make happy.

Lisa Zeeveld:

I don’t know why there’s such a disconnect. It’s really easy for people to look at big corporations and go, “Oh, yeah. They’re losing money. They probably need a new CEO.” When you’re running a business and you go, “I’m losing revenue,” you never think, “Well, maybe I got the wrong people leading the company.” So look at your leadership too, because that definitely has an impact on your revenue. And you might need some fresh perspective in your organization. Don’t keep people around that can’t move your business forward too.

Tricia Sciortino:

Yes, amen. And one of the things we did to counter that was last spring, we actually created a new position here, there was a vice president of revenue. Because how important someone being focused on the money that comes in the door, was going to be for the future success of our organization. And I feel like that role and the amazing talent we have sitting in that role, our VP Lisa Seal, has absolutely made a difference. That having the right people on the right seat of the bus with new or interesting roles can absolutely change the trajectory of your business’s growth, sales, up and down. So you may have people that are pulling the organization down. But you can also add people to your organization who really pull it up. So on both sides of the fence, I would say we’ve seen both scenarios. But that was one of the things we did in spring, in the midst of all things was we needed a new point person, and that role will benefit us. On the outside of that is benefiting the organization for the future. Because at the end of the day, we’re all in business to be in business. And so we all need revenue.

Lisa Zeeveld:

And too, I mean, you just said it. We’re all in business to be in business, to earn revenue. And so I know what I see a lot of times in smaller organizations, even up to mid size, is that the people who helped you get to where you are right now may not be the people who are going to get you to the next season and to the next level. And so you have to realize that it’s not personal. There has to be a little bit of a disconnect there. You can really like them as a person, love them as a friend. But if they are not helping you advance your business, and that’s a bigger problem.

Lisa Zeeveld:

And so really find ways to make sure that the people you have on your team, that you’re not making emotional decisions, which comes into EQ EI. And as leaders, you have to have a really healthy EQ to make these decisions about revenue and about growing your business.

Tricia Sciortino:

Absolutely. Couldn’t agree more.

Lisa Zeeveld:

So how do you balance that? As our CEO, how do you balance being caring? How do you balance, wanting to build trust in the organization, and at the same time, casting vision and sometimes casting vision about making big changes in the business that other people might not understand?

Tricia Sciortino:

Yeah. I think it is just having equal parts, or at least what we strive to do, is have equal parts of employee satisfaction, and employee performance, that those things are equal, that our culture matches our growth mindset and high performing team. So I think a lot of times you see organizations that are heavy in one, or heavy in the other, where you may see an organization that’s really culturally minded, but they’re so culturally minded, that they’re like, the results are the results, and they’re not so focused on them. And so you might see that they’re less successful. And whereas you can have businesses that are the other side of that coin, where they’re so focused on results, and the money, and the KPIs, and the performance, that the culture suffers, and people don’t love their jobs.

Tricia Sciortino:

So either scenario is a lose. You’re either having high turnover, because people don’t love their jobs, because you’re so results in their face and turnover is really expensive. Or you’re so high culture, you don’t pay enough attention to the results, you don’t get the results. So the results don’t just come. What you pay attention to is what you will receive. So I think we, and I, try and do a really good job at marrying both of those things. And it can be that they’re equal. If you were to put them on a scale next to each other, that they would balance, that we would have an equal amount of attention paid to the performance of a team member, as we do to the care about them as a person, and that it’s not outweighed. And I think if you can find that perfect balance as an organization, then you win. And then you have employees that feel cared for, but also very accountable to do great work.

Lisa Zeeveld:

Right. I mean, you can’t operate as a business on a negative cash flow for very long. So you’ve got to cast vision. Results matter.

Tricia Sciortino:

Results matter.

Lisa Zeeveld:

Exclamation point.

Tricia Sciortino:

Sorry. They just matter. And so if your leaders or your leadership team are not in that school of thought, you might have a gap.

Lisa Zeeveld:

That’s right. Yeah, exactly. Well, as always, we want to give you One Next Step to take this content and apply it. Today, it is super easy. We just spent 20 minutes exploring how to navigate a loss of revenue, something no one wants to think about. I know. I know you don’t either. But that’s exactly what we want you to do today.

Tricia Sciortino:

Yeah. So spend some time today or this week reflecting, asking questions, and seeing if there’s anything you need to do now to protect your business in the future. Do you need an advisory group to review profit and loss statements? What are the things you need to put in place so that you’re better prepared if a loss comes your way? If you like that idea, outline what that would be and start some conversations. Also, visit OneNextStepPodcast.com to review the show notes, and spend some time reflecting. Thank you guys for joining us today. Thank you, L.Z., for the awesome conversation. Until next time, own your journey. It’s your life and your business. It’s up to you to create the life and organization you want. Join us next week for more practical tips and actionable tools to advance your business one step at a time.

Lisa Zeeveld:

Yes. And start by making today count.

Speaker 2:

Thanks for listening to One Next Step. Be sure to subscribe on Apple podcasts or follow us on Spotify. Then join us next time for more practical business tips and tools to help you get more done, grow your business, and lead your team with confidence. For more episodes show notes and helpful resources, visit OneNextStepPodcast.com.

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