Many one-person businesses that were thriving before the coronavirus crisis are trying to come up with a game plan for surviving the sudden economic slowdown.
For ideas, I recently spoke with Michael Dermer, founder of The Lonely Entrepreneur, a learning community for entrepreneurs.
I learned about Dermer’s work from Lyneir Richardson, executive director of the Center for Urban Entrepreneurship & Economic Development at Rutgers University in Newark, N.J. He mentioned that the Lonely Entrepreneur program had been very helpful to entrepreneurs in the program.
Michael Dermer tapped what he learned in turning around his company to create The Lonely … [+]
The Lonely Entrerpreneur
In the early 2000s, Dermer, an attorney, founded IncentOne, a company that was an early player in rewarding workers for healthy behavior. IncentOne grew to 500 employees—until the financial crisis of 2008 hit. “Our $60 million business got cut in half overnight,” Dermer recalls.
He and his remaining team were able to save the company after two years of working around the clock and eventually sold the company. “It almost took us down but we got back up,” he says.
Many of the same strategies that helped him save IncentOne translate well to smaller firms he now advises, Dermer found. “While solo entrepreneurs often lack capital and resources, they don’t lack the ability to think differently,” says Dermer.
Here are some of the strategies he recommends for right now.
Rethink what you’re selling. A product or service that was in hot demand before the crisis might not sell in the post-coronavirus environment. You may need to put a new spin on what you’ve always done or try a completely different offering.
Dermer recommends taking inventory of the revenue opportunities you have now and which ones won’t work because of the economy. That will point you to new opportunities.
“Ask yourself ‘What do people need now?’ Dermer suggests. “Can I shift my business to the demands being created by the times?”
Need ideas? Dermer suggests thinking about what new lifestyle considerations consumers have as they shelter in place with their families—and that businesses are coping with, like the need to get funding from programs like the SBA’s lending programs.
“There are demands being created,” says Dermer. “That’s where the real opportunity lies.”
Create emotional distance. This isn’t easy to do for most solo entrepreneurs, who tend to be very passionate about their businesses—but it’s important to making good decisions.
“You have to be an unemotional, deliberate and thoughtful leader,” says Dermer. “You can’t react to the emotions. You have to build and execute a plan, take away the highs and lows. Only focus on things that matter.”
Rethink revenue and expenses. During a crisis, money may not flow into a business from the same sources as in the past “Ask yourself, ‘If I’m not going to get revenue here, can I get it from there?’” he suggests.
You may also have to change your spending patterns. “Maybe you can’t keep your marketing firm, but you can get a college kid who’s back from school to help you,” Dermer suggests.
What if you can’t pay your bills on time? Now is the time to reach out to the parties you owe and try to work out a solution. “Especially when things are stark, everywhere up and down the supply chain, people are renegotiating,” Dermer says. “You have to go to your vendors and come up with different ways to extend your cash. Think about barter, where you trade and no money changes hands.”
Embrace guerilla marketing. “Go smaller and go local,” Dermer advises. “Reduce your expense base so you don’t have as much revenue to generate. If you were selling baby food all over the world, sell it in your community and deliver it. Bring down the scale.”
No one says you have to stay in crisis mode forever. But in the meantime, says Dermer, “it’s about entrepreneurial resilience.”