CHALLENGE ACCEPTED!

There has been a bit of upheaval over the past few years, and it doesn’t look like 2023 is going to suddenly calm itself down. That means we continue to have the choice on how we view the external world and act upon our assessment. I propose that there are two dichotomies of options presented that maybe aren’t so opposite as they first seem. The first is the question of Opportunity versus Threat. The second is reactive versus proactive decisions and implementations.

Let’s take the Sound of Music’s advice and start at the beginning (a very good place to start). We can’t control all the crazy going on. Lots of people make decisions that given the same options, I would choose differently. Try as I might, I am not able to make everything be exactly perfect (as I see perfect). It’s this whole not being able to control others, time, and space. I’m working on it. Until I get that figured out though, I have to focus on how I act.  The first decision I have to make is how I view or frame things. It’s a bit of that cup half full thing, but it is more powerful than that. Whenever I am confronted with a challenge, I first acknowledge it. “Uffda, that’s, uh, not expected.” Then I have to make a decision on how to address that challenge.  Is it a threat that I have to fight or flight my way through? Or is it an opportunity to learn, grow, and innovate? Same challenge, but very different framing. That framing impacts what decisions I make and implement. At every challenge, I have to assess my risks of my decision, and if I choose Threat versus Opportunity, then my risk assessment is impacted. I look at different risks, different solutions, and different expected outcomes.

That leads into the second dichotomy of reactive versus proactive. We know that there will be challenges. We don’t know the exact form, but we know some general impact. Anything that qualifies as a challenge, regardless what I frame it as, is a challenge because it will impact how I operate my business. Anything that impacts how I operate my business impacts how I earn and spend money. And many things that impact my business impacts others’ businesses and how they earn and spend their money. So that means at every inevitable challenge, I need to look at my company’s actions and my clients’ actions and assess if that means I’ll be able to meet my obligations.  But here’s the thing, I don’t have to wait for a big challenge to make a lot of those assessments! Yeah, I don’t have to be 100% reactive. I can be proactive.

As a business owner, I want to limit my surprises, reduce the quantity and magnitude of each challenge that could qualify as a threat. How can I do that? Here are three first steps:

• Create processes to limit self-inflicted challenges or amplification of those challenges
• Create plans for anticipated challenges
• Identify likely weak spots and shore them up now

Each of those things take three additional steps:

• Set clear expectations of the actors
• Explain the consequences of likely actions
• Describe the desired path forward

So let’s take those nice generalizations and add specifics. We could say “If there’s a recession” but let’s be realistic. It’s a “When there is an economic recession.” Because it’s the economic cycle. There are ups; there are downs. It isn’t an “if” but a “when,” and we can do risk assessment and risk mitigation now for that future inevitable recession challenge. In a recession, many businesses face a decline in payments from customers. Customers assess their spending and decide what to pay and what to let go. And what do they let go? Things they don’t see a value in, things that they aren’t committed to, and things with little to no consequence for not paying. Do we have to wait for a recession to recognize if our customers are likely to decide that we are in one of those buckets. Nope. We can look at our business right now and ask, “Do my customers recognize my value?” “Are they committed to me in some way?” “Do they have consequences if they don’t pay? And do they know what those consequences are?”

That last one is probably the easiest to answer. Ask these questions:

1. Does my customer pay me before or after I provide them with my product?
2. If they don’t pay, how are they impacted?
3. Do I have a written agreement with them explaining that impact?

If they pay before they get your good or service, then it’s fairly easy to know the impact. They don’t get my stuff. So maybe look for ways to get paid in advance. If pay after and there is no consequence other than “they feel bad” and you might sue, then you are allowing a lot of risk to be on your side of the balance sheet. How can you shift the risk and the consequences of their actions on to them, the ones choosing their actions? Perhaps late fees, shutting of the flow of the product, or interest charges are in order. And all of that is much more effective if your customer knows about them. Actually knows and can look back and remind themselves of the potential consequences. You know, like in writing…that they’ve agreed to…in order to get your product. Let’s call it an agreement (or contract or terms and conditions or terms of use). You could put those agreements in place right now (or update them) to address the knowable, predictable risks and reap the benefits long before a challenge forces a lot of investigations, decisions, and implementations on a number of items. Be proactive with an opportunity to strengthen your cash flow now – Challenge accepted!