All things pass

It now seems we have a label for the condition we are facing as an economy. It is not a new label – the recession. Don’t kid yourself that this is somehow different to the last four years; it isn’t. It started in March 2020, with the Covid scare and global reaction. Now we are paying for it, likely for another two or three years. Two years of printing money and dramatically increasing debt, asset bubbles in 2021 and 2022, and asset value corrections in 2023 and 2024. That will all continue, along with high inflation. We paid for the party of ‘20 and ‘21 with fiscal deficits and government debt. Now, we must get back to surplus and pay off debt. Interest rates have to rise to kill off inflation, at least in terms of how we have thought about doing that until now. The result: pain and misery everywhere.

Thrown in with all that is a long-run debt expansion cycle, ending with debt elimination – either through inflation or default. We also have a demographic bubble of Baby Boomers, with businesses they can no longer lead or effectively sell, waiting to collect pensions. We have geopolitical changes in terms of the dominance of America as a world power, massive and accelerating technology disruptions, and the widespread belief that taking personal accountability is less rewarding than finding some grievance to use as an excuse for being a hopeless, helpless victim. As a society, we are certainly not in good shape.

Forget these problems; you are leaders in your own businesses and communities, and it is time for good leadership to shine. Let’s all take a bit of responsibility for how we do that. This article is to give you some thoughts.

First, plan. Before you work out what you are going to do, consider: Why should I bother?

Where do you want to be in five years’ time?

Surviving in itself is not a reason to keep going. If you are still standing, emaciated psychologically, and not proud of what you did in a crisis, it is rather pointless. Remember, you have to feel good about yourself to keep going.

What do you care about?

For some, it is money; for others, it is status, experience and knowledge, relationships and community or family—however we define that now. Work this out before you start reacting reactively to what is in front of you. Answer the questions: coulda, shoulda, woulda.

What can you do, what will you do, and what should you do? Who is it all for? Ourselves, our family, our teams, our community? Why do our businesses matter, and why do we matter? If we weren’t here, would we be missed? Or doesn’t any of that matter to you?

If you can’t answer these basic questions, seriously consider stopping – especially if you are already in your 60s or 70s. Peace is an underrated joy. Stopping doesn’t mean that what you do will no longer continue, but the why and how you do it will. And that may not matter to you or anyone else.

How much useful time do you have left?

If the suffering to survive three years and the drive it will take to lead your people through it is likely to run your battery empty, and you only have a year or two left in you to enjoy the sunshine after the rain, well, you may as well have the next three years in peace under a cloudy sky.

Is this where you hand the business over to the people who work in it under some collective shared ownership scheme or appoint someone to run it, keep a stake and try governing it? Or, if you don’t want to govern, maybe appoint a Board? Regardless of whether you fight through to the other side as a leader, governor, or owner, this is the time to believe in the people who have believed in you.

If, on the other hand, you are young and full of drive and intend to lead and grow things and people in the future, how you lead over the next three years will define you for the rest of your life – one way or the other.

Now for the less philosophical part.

Never run out of cash

First, triage your assets, working out what matters to you and why. Then, meet the market and sell the assets that don’t matter. Forget what you paid for them, and just focus on cash.

Second, change how you interact with your bankers. They are your partners; treat them as such. They need to trust you and believe in you. Sure, they have power because they have cash, and they can lend it to you or demand back that which they have already lent you. If they believe you will behave well and pay them back eventually, they will believe in you. If you choose to trust them, go and ask for some backup facilities.

Sure, you will need to explain why and have a plan to generate future cash, and they have to believe you are good for it. Sure, they will want security, which will be the assets that you want to keep and that matter to you. Make sure you have a compelling reason to hold onto your assets and can communicate why these assets matter.

You should have all heard the expression ‘paying it forward’. Assuming, for the moment, that in the run-up to now, you have been paying it forward, being generous when you could be, then it might be time to ask for return favours. This means asking your suppliers to extend your credit terms, asking your customers to pay early, or perhaps ordering more of your services if they can.

This is a great time to be humble and vulnerable and ask for help. Why? Because it will sort out the gold from the sand. In my experience, paying it forward to 100 people will only result in about three paying it back. The good news is that the three will pay for the 100. This is a great time for you to sort through the hundreds of people you have helped to find those who were truly deserving, who valued what you did for them, and who you matter to.

If you have lived long enough, you will have had a few cycles of this gold panning, and if you are lucky, you will now have more gold than sand. These golden relationships form a community that will have each other’s backs. So now is the time to build your community. You do this by being vulnerable, and there is absolutely no shame in that, but only if you have paid it forward.

If you have not been in the habit of paying it forward and have the means to do so, this is the time to do it. Find the 100 you think are deserving, and then you will have the bucket of sand to find your first three truly loyal friends. You will then start to build a network of the deserving and capable that will build an awesome community.

If you struggle with that, then you are on your own. You must focus on earning a dollar and spending no more than a dollar.

If you are sending more than a dollar, understand that the cash will run out sooner or later, and you will suddenly stop. If you are spending more than a dollar, recognise that either your cash reserves are falling or you are building up debt to others that may not get paid, essentially eating someone else’s lunch without telling them. It will be remembered for a long time if you eat other people’s lunches in business.

If you are running cash down, you are investing in something—so, can you answer what that is? It may be tangible things like inventory, debtors, or plant, or it might be intangible things like knowledge, capacity, relationships, and talent. If resources are scarce, you must work out which things to stop, keep, and start.

How you stop doing things can be traumatic for others. Your behaviours around such hard decisions and how you behave through the process will define you. This doesn’t mean you can’t be hard on those who deserve a smacking; in fact, the rest of the team would expect it of you. But with judgments around this, if you get them wrong, hang around for a long time.

Guide to behaviours in crisis

Firstly, always be authentic and true to your values. No one will trust you if you are fake.

Secondly, be transparent and truthful; same deal, no one will trust you if you are not.

Thirdly, don’t react unless absolutely necessary, and before it is necessary, demonstrate personal suffering and sacrifice before you demand it from others. Don’t forget the mantra: leaders eat last.

Fourthly, when you do react, be decisive, stick to your decision, communicate it well, and explain why it is necessary. If you can be caring and pay it forward, you can act with generosity.

Help others, pay back your paid-forward debts, help the deserving and build a community.

Talk to others, share your ideas, and collaborate to ensure that everyone in your community survives. Be there for others who matter to you, and know they are there for you. Together, strong, independent, and resilient people are even stronger.

As I said at the beginning, how you confront a crisis will define you; be mindful of that and behave as you wish to be remembered in the future. It takes 50 good deeds to live down one bad one.

Finally, it will be a once-in-a-lifetime opportunity to sort the gold from the sand in a compressed time frame and build a stronger community.

As my dad said, the six years he spent in Europe during World War II were the best years of his life. It’s hard to imagine that, really, but it was because he learned who he could depend on—an indispensable skill in life.