An Entrepreneur's 6 Step Response to the Coronavirus

The coronavirus is destroying huge swathes of the world’s businesses and economies. 

If you are not in the supermarket, home delivery or health care sector, where sales have been exploding, indeed, if you are not in the “essential to life” sector, then no matter how entrepreneurial you are, your business may suffer and fail, and you may be out of options.

The Chancellor of the Exchequer, Rishi Sunak, has given numerous and bold assurances over the last few weeks. We are told the government will provide all the tools to get through this. Jobs, incomes and businesses will be supported. The government will do: "whatever it takes". The government will stand behind us with an unprecedented package of financial support. 

However, even Mr Sunak has also been clear that the government cannot save every business. It cannot save every person. There are going to be financial casualties.  

I wrote this article, not because I can promise superior insight, not because I have a blueprint or “system” to sell, not because I have a magic wand or anything like that, but rather, because, I have experience of both being an entrepreneur and of having financial problems. I believe I can also add some perspective, as professionally, I am a business lawyer, and as a business lawyer, everything I do day to day, involves helping entrepreneurs with business and business contracts. I am there at the beginning of businesses helping with the formation, during the journey, and at the end. In the good times and in the bad. I wrote this article as I also think there are some skills and qualities that I can share that may help some entrepreneurs respond in a more positive and proactive manner to this crisis. 

First, I would like to share a little bit about my own financial and business experience. 

As a teenager I saw my father as a successful business person get involved in some bad deals with some bad business people. Protracted litigation plus the 1990 UK recession equalled the family home, wealth and security being lost. Worse still was seeing the impact on my father. As a result of this experience, I took the view, especially given my then abysmal academics, that I never wanted to see my family and children lose their home or go through this experience. To me, the lawyers always seemed to have the answers. So that was the way to go. 

So around 20 years ago, at the age of 26, I got qualified up. With a few years of experience, at the age of 35, married, with a 2.5 year old girl, and being a one-income family, when the world had then just come out of the 2008 global credit crunch, I decided to go it alone, and go self-employed to start-up and run my own law firm. With no pipeline or customers as such, with a massive loan I borrowed to supplement my income, and pretty much 'isolated' on my own for most of the day (as in the beginning I rented a tiny room on my own), it is not a strategy I would recommend. 

But I ran my boutique firm, SL Law, for 6 years exactly, closing it solvently and compliantly, as part of a merger where I am now working with Curwens. The experience was not plain sailing. There were plenty of times where I was ready to throw in the towel. There were plenty of times which were pretty dark. 

I am not mentioning the above because I believe this qualifies me as an expert in business, or proves I have credentials, but rather to say, solely, that I have had some scary financial experiences in the past both as a young person without responsibilities and as a married man with responsibilities.  

I am also not naive to pretend the current coronavirus emergency is anything like I or anyone may have experienced before. It may be for some no advice can really help, and I am sorry if that is the case. I hope you can find people to talk with to help. Whilst I strongly believe the government and science that we will get through this, and that the problem is not a long term problem, nevertheless, the problem is big and the problem is unprecedented. 

I hope, having set out some of my background, you are interested to read further. I hope you will find my own views helpful on how I think an entrepreneur can positively and proactively respond to the coronavirus. 

Response 1 - it is okay to feel bad, but don’t be too hard on yourself 

I think a lot of people still have a lot of shock at how unexpectedly and quickly the world has been turned upside down. I have to watch myself to avoid tuning into the news too often. It can feel hopelessly depressing, and yet, in the UK, we are only at the apparent start of the curve and problem. As I started to write this article a few days ago, it turned 8pm and my whole street started clapping for the NHS. At that moment, a new feeling, a sense of belonging, a sense that we really are in this together #InItTogether. The next day a different feeling, of trying to focus on work within a screaming household. Thinking about how I am going to look out for mum? The feelings are all over the place.

My point is, and I know this may not be possible in many cases, but however bad you feel, it is okay to feel that way. Let yourself feel the emotion. Feel the overwhelm, the fear, the guilt, the inferiority or whatever it is. Let the pendulum swing into the negative feeling zone. It is okay and normal. 

But don’t be too hard on yourself. Avoid dwelling and ruminating. Let the pendulum swing out into the good. Grab onto those positive moments. Pause. Breathe. Have a cup of tea or coffee. Be grateful for what you do have. This could be a very bumpy ride ahead. 

Response 2 - imagine that no one is coming to the rescue

I have always loved listening and reading to personal development audio and books. One of my favourite authors is Brian Tracy. In one of his programs he says: “The world is full of people who are waiting for someone to come along and motivate them to be the kind of person they wish they could be. The problem is that no one is coming to the rescue”. He goes on to suggest an affirmation we can use: “If it is to be, then it is up to me”.  

For me, during difficult times, I often hear these words like a dull echo justifying everything I do. I will often say to my wife and kids, if you want something, then you have to go out and get it yourself, as: “no one is coming to the rescue”. Or I say to myself, I am working all hours of the day, as: “no one is coming to the rescue”.  

For me, even though the government is providing the unprecedented levels of financial aid, and doubtless most businesses will need to avail themselves from as many of these as possible, I don’t believe for a moment that money alone will be a cure. In order to get over the current crisis, perhaps in order to just keep the head above the water and survive, we need to be responsible ourselves. The difference that will make a difference in our future will be ourselves, not the government or anyone else. I am sorry to be cynical but I just do not believe for the longer term, anyone is really coming to rescue our businesses.  

For the entrepreneur, the question is now going to be how to continue to make a viable profit. How to adapt. Perhaps this will be a lower profit than before, as the world downsizes. However, even if the government provides a bridge for now, no government is going to guarantee our success for the future. That, in my view, will be down to us to work out and to be responsible for. 

Response 3 - be honest with the reality and facts, warts and all

I have had a few financial skirmishes in business and personally where things looked pretty bleak and ugly. There is a tendency to avoid the problem and stick the head in the sand. But that does not serve any purpose and it is counterintuitive. Ultimately it will be far better to be open and honest with exactly where everything is at, if for nothing else, then to make more informed decisions. 

There are a few exercises that can be taken here. First and importantly there is the human reality. In a civilised society we have to put our health and family first and take account of these needs as a priority. 

Next there is the business and economic factors. For the entrepreneur, any business will be part balance sheet and part profit and loss. It may be there are assets but no income. Or no assets and no income. Or worse, no assets, no income, but lots of personal liabilities. It may be considerable investment has been made into property, which will now have to be sold at an undervalue and loss. It may be many years of work building a business, building goodwill, which could and should have been monetised and sold for value as a retirement fund, has simply evaporated into thin air. 

In addition to the financial reality, there is the inevitable impact on other areas of life, whether family, mental, social, physical and so on. The impact on all factors should be considered.  

Whatever the situation, take the time to be clear and aware of the whole of the reality. As the chief medical and science officers have been saying, there is no point testing for the sake of it, you need to be clear the testing is reliable. In the same way, when you consider your situation, you should endeavour to be completely clear about the whole problem. 

Whenever I advise clients on contracts, I often take some time to play the devil’s advocate. If someone is buying, I ask what if there are skeletons in the cupboard. If someone is selling, say on deferred payment terms and the buyer does not pay, I ask what would you do. If someone is entering into a partnership, I ask what if your partner dies or breaches the agreement. I will go through all the relevant scenarios. Sometimes clients are shocked, and they need time to process the scenarios. Often the client will deny these doomsday scenarios will happen to them. To speed things along, I will insist they stop procrastinating about the problem, just imagine it has happened. The partner is dead, or they have breached, or they have gone bust and you are not going to be paid. Now what do you do? Do you want to change your contract? It is amazing once you force the scenario planning into the conversation, and you have got past a client’s initial emotional resistance to engage, how you end up with the more expected standard human response. People do want to be protected. They do want more from their contracts. But it is only by uncovering the layers and being honest that we can arrive at making the most informed decisions. 

Corona may have forced business and financial problems to come to ahead, but by being completely honest as to our situation, and uncovering our layers, this can really help with our response. 

As a final word on this part, I would recommend taking account not only of what has gone wrong because of the coronavirus crisis, but also what is still right. If you are still healthy and able to feed yourself and your family, then this is a plus. If you have an education, experience, specialist knowledge and skills, then these may all be utilised again when finally “the corona is sent packing”.  

Response 4 - be creative and resourceful 

Even if there is limited scope for the entrepreneur’s existing business, it may be there are things that can be done. 

The world is in a state of mitigation in response to the coronavirus. By the very nature of mitigation, this means the damage has already been done. It is too late to stop the problem. The only question is how much damage will be done, and by taking steps to mitigate, to make the damage less bad. What can you do to mitigate and make your business problems less bad?

We have probably all heard the expression from English literature that: “Every cloud has a silver lining”. I understand that this expression originates from a poem written by John Milton. Milton is perhaps most famously known for authoring Paradise Lost being one the greatest works of literature ever written, some 350 plus years ago. He was totally blind at the time of authoring this poem. I mention this for two reasons. First for some perspective. Milton’s greatest work with Paradise Lost, was created 6 to 12 years following his becoming totally blind. Secondly because, whilst nothing in life now may be so certain to be guaranteed, even in a crisis there can be opportunities. For sure, even if for only a small minority, there are going to be industries and sectors which, from a financial perspective at least, will be winners. So be creative and resourceful and think about what leverage you can apply, whether from your knowledge, your skills, your contacts and relationships, your money and anything else. 

Brainstorm the business ideas and there are potentially numerous possibilities. Have you considered any of the following:

Government and non-governmental financial support 

• Applying for any of the government’s financial support measures. See the Business Support Portal. Or consider any other non-governmental financial support that there may be, say a standard overdraft, invoice discounting or a standard business loan?

Joint venturing and investment

• Finding an investor who will invest into the company for a portion of equity (like as if going on dragon’s den). 
• Can you syndicate, collaborate or amalgamate with other businesses? Or perhaps you can buy out your competitors? Is now the time to form strategic alliances or joint ventures? Would you benefit by combining or sharing assets, know-how and staff?
• Can you make use of crowdfunding investment?

Restructuring and liquidation

• Can you restructure the business, or liquidate part only of a failing or failed part? Could that part instead be sold? 
• Can you downsize rather than liquidate?

Cash flow management 

• Can you informally agree to payment holidays from key stakeholders? If not can you seek a more formal moratorium from creditors?  
• Are there some expenses which can be withheld for a few months?  
• Can you require customers to pay you earlier?
• Will your customers and suppliers be willing to support you through the bad times? What sort of support do you need that you can ask for from them?

Marketing and branding

• Can you change the way your business markets for customers?  
• Can you rebrand the business? 
• Could you appoint an agent or distributor? Or become an agent or distributor yourself?
• Could you licence or franchise your business name or model?

New business lines

• Do you have bespoke software you can licence to third parties?
• Do you have specialist know-how you can commoditise and license?
• How can you exploit your existing customer database, say by diversifying?
• Can you sell your existing customer database?

If you are not sure how to implement change to your business, how to manage contractual problems, or even what your options are, then do try and take professional advice. Note that the government is continually providing more assistance. Yesterday the business secretary Alok Sharma announced further government reforms, from the relaxation of wrongful trading rules for three months from 1 March 2020, and changes to insolvency rules to provide more protection from those with financial distress. So it is important over the coming weeks and months to keep checking. For example, see the new government Business Support Portal.

I am writing a number of legal notes on the impact of the coronavirus. For example on wrongful trading and directors duties, and the impact of force majeure and frustration on business contracts. My colleagues are also building guides on key subject matters. 

There is a wealth of other information out there which may help provide guidance on options. 

Response 5 - slow and steady wins the race

Many self-help gurus will espouse the principle that taking action on an average plan is better than procrastinating and pondering over a perfect plan which never sees the light of day. It is better to do something, even mothballing assets, than not to do anything. But with the coronavirus, lockdown and restrictions on social distancing, it seems nothing or only a limited number of things can be done. We are in for the long haul. As the Greek fable writer Aesop once wrote: “slow and steady wins the race”. 

Take your time to consider your responses, but don't spend forever finessing it. Work with what you have. My first five responses in this guide for entrepreneurs being: (1) It is okay to feel bad, but don’t be too hard on yourself; (2) imagine that no one is coming to the rescue; (3) be honest with the reality and facts, warts and all; (4) be creative and resourceful; (5) slow and steady wins the race.  

An obvious plan may or may not come to you, but the entrepreneur will keep asking the question how can I continue to make a profit. The entrepreneur will find a way to build a plan, take action on that plan and slow and steadily, get through the crisis. 

Response 6 - be persistent 

I would like to conclude with the one quality, that I would say has perhaps been more important to me than any other quality. I know most people may say the most important qualities are things like, clarity of vision, smart goals, action orientation, regular reviews and others. But for me, in my experience, the number one quality that has seen me through difficult times, has simply been a dogged level of persistence. 

Whilst I have absolutely no idea what the landscape will look like once we are through the immediate urgency of the coronavirus, once the social distancing restrictions can be lifted, and ultimately when we will have immunity and/or vaccination, I have a personal belief that if I keeping trying and going, even if I fall over from time to time, things will work out in the end.  As was said in the movie Rocky Balboa:

“Let me tell you something you already know. The world ain't all sunshine and rainbows. It's a very mean and nasty place, and I don't care how tough you are, it will beat you to your knees and keep you there permanently if you let it. You, me, or nobody is gonna hit as hard as life. But it ain't about how hard you hit. It's about how hard you can get hit and keep moving forward; how much you can take and keep moving forward. That's how winning is done!” 

In these terrible times, I wish you and your family safe and well, and continuity for your business. Life may not feel very much like winning, but surviving this short episode with our health (mental and physical), happiness and family is winning. 

To your business success, now and in the future

Spencer

Spencer Laymond is a business lawyer who has acted on hundreds of business acquisitions, joint ventures and agreements in a multitude of industries, including optical, property development, care home, legal and accountancy. If you are an #entrepreneur thinking about restructuring your business, setting up a business, or getting into a business relationship or agreement, taking independent legal advice can be worth its weight in gold. If you want to speak with me then please get in touch.

Please note that the information in this article is for information and educational value only. No representation or warranty, express or implied, is given as to the accuracy or completeness of the contents of this article.