A version of this article originally appeared on Forbes.com and was graciously provided by Paula Black. Paula is one of the world’s leading business and professional development coaches for lawyers, entrepreneurs & service providers, award-winning author & speaker.
Do you remember where you were on September 15, 2008?
I’ll never forget. I was on a cruise in the Black Sea, sailing from Athens to Istanbul. At lunch, a strange and ominous feeling came over the room. People started to whisper, and the whispers grew louder. Finally, the news reached my table…
Lehman Brothers had filed for bankruptcy.
At the time, I owned and managed a large branding agency in Miami. I didn’t know exactly how my business was going to be affected, but I knew it wasn’t going to be good.
And it wasn’t good. It was devastating. In fact, it took me nearly seven years to fully recover from the fallout.
Along the way, I learned a lot of valuable lessons—lessons that I’ve used to build a much more stable, resilient business for myself, and lessons that I teach my clients to apply in their businesses.
I don’t know what the long-term future holds in a post-COVID-19 world. I don’t know if we’ll experience a deep recession as we did in 2008 and 2009. Nobody truly knows.
But I do know that the lessons we learned from the 2008 economic crash are very relevant now. And so I want to share three of the most important ones with you today.
1. Don’t dig a deeper hole. Following the 2008 crash, I was determined to keep my company afloat and let my employees keep their jobs. For the next two years, I slowly depleted my savings, and then my retirement funds…only to eventually scale my business down anyway. What happened next? Well, my employees found new jobs quickly and I was left to clean up the mess with my savings depleted.
Please hear me when I tell you: If the writing is on the wall, don’t bury yourself in debt trying to salvage a situation that can’t be saved.
2. Keep your overhead low. When the economy is hurting and we’re facing uncertainty, nimble companies have the best chance of succeeding. Keep your overhead low and you’ll give yourself a fighting chance.
In 2008, I was convinced that I needed to keep my entire staff of 20-plus employees, but the truth is, I didn’t need to do that. That overhead eventually became a weight around my neck. Don’t put yourself in this situation.
3. Manage your debt with an iron fist. Building up debt for yourself is like choosing to tie your hands behind your back: You become a prisoner. At a time when flexibility is critical, debt limits your options. I highly recommend that you hire a good bookkeeper to help you stay out of trouble. They’ll help you create good financial habits and warn you before the situation spirals out of control.
If I could travel back in time to 2008 and give myself these three pieces of advice, it would have made a world of difference. Taking these lessons to heart helped me build a business that can weather the storm. I hope that you’ll do the same!
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