Start with plan B

I want to share a lesson I’ve learned that helped me go through the roughest times.

Managing a fast-growing business is hard. The struggle is real and if you want to get a piece of what most successful entrepreneurs I’ve ever met went through, I recommend reading “Hard thing about hard things” by Ben Horowitz.

‘Stand still and your mistakes catch up with you!’ - Terry Pratchett, Making Money

When you suddenly lose over 60 percent of your revenue, all the excuses for change are gone. The time for sentiment is gone. You either make tough choices between bad and worse or you die.

Winning in this game is all about your ability to adapt to changes. Whatever you’ve been doing so far, it led you to the moment of crisis. I used to have a lot of excuses for my failures over the years. Bad market, customers not appreciating quality, bad team, or a million others.

But if you have excuses, you are not determined to change the very fundamentals of what put you in this situation.

The first step to overcome the excuses is to acknowledge where you are. Stand in front of tough facts, accept them as the result of your own actions, and be okay with that. This will let you move on.

For me, when our revenue went down, it was time to finally make a list of all unpaid invoices. I couldn’t change the facts - we were drowning, and we had to act.

I know that our minds are very smart about making excuses, so be very cautious. Right now with the Covid-19 pandemics, it’s very easy to blame your failures on the crisis.

It’s a trap. Neither the pandemics nor the crisis is a black swan, according to Nassim Taleb. Just the opposite, these are events almost sure to come - we just don’t know when.

Starting a business, you have accepted that there will be tough times. If you want to be successful, you need to win in hard times just as much as you need to win when the winds are good for you.

Navigating through the storms requires a kind of boldness. So how do you conquer your fears? You make peace with the consequences of your decisions. With all possible outcomes.

That’s why I always ask the founders: What is your backup plan? What if you fail? Are you okay with losing 5-10 years of your career? Your life-savings? Your reputation? Your ego?

What will you do when everything blows up? How will you cope with the need of firing half of your team overnight to save the company?

Answering those questions is what gives you peace of mind and when everyone is panicking, you are able to calculate your moves. You get motivated through stress and you are able to make bold choices. To play high. To go all-in not into something that’s been working for years but in an outrageous pivot.

I know a company that was selling gadgets for events all over Europe. Their revenue went down 90% in the first 2 weeks of March. In those 2 weeks, they have completely changed their business and started to produce custom Covid-19 masks. This allowed them to bounce back and have record revenue in the same month.

How bold do you have to be to change your whole business overnight? To fire half of your crew and then hire others to do a different job, to have your sales force sell a completely different product on completely different markets?

I can’t imagine making such a decision without being okay with failure. Being okay with not being able to sell a single mask. Being okay with sacrificing the whole business on a bet of saving it.

Playing safe, cutting costs to preserve the ability to rebuild is one option, but going all-in, sinking the whole thing, or winning against the odds is what separates winners from losers.

To do that and not go crazy, you need to be okay with whatever is the outcome.

This is empowering. This is what lets you thrive when others fail. The crisis is the moment of rapid change. How do you cope with it? You need to be prepared. If you’re not prepared, it’s just too hard to cope with everything at once. You need to move fast to survive.

One of the hospitals had their emergency response team train together with a pit-stop team from Formula 1. Saving lives and winning the race is about the perfect collaboration of the whole team. You never know if changing tires will be enough. Maybe you’ll have to replace half of the car. You never know what awaits you when you’re on an emergency call. You need to be prepared for all the scenarios.

Those people change the tires in less than 2 seconds while being ready to repair half of the car in an equally outrageous time. How do they do that? They practice. Every scenario. Thousands of times. They are ready for every scenario that they can anticipate.

They are okay with their drivers failing. The drivers know the team has their back should they, say, take damage when fighting position.

That is why the drivers can go all-in. They know that even if they make a mistake, it’s not over, they have friends that are ready to help them no matter what.

And if everything fails, they have a helmet.

This gives you the courage to go over the edge and win when there are no odds. Desperate times truly call for desperate measures.

When I was starting Neoteric, my plan B was having a job that will let me cover any failures that I make through my journey. That is why I haven’t focused on growth in the early days - I was focused on building my skills, I became an expert in the fields of business analysis and project management. If I failed with my company, I could always get a job and safely get back on my feet.

But as the company grew, I’ve stopped being okay with losing it. So how do you take bold decisions if you’re not okay with your current plan B? You develop another one, and the previous becomes plan C.

I still wanted to be all-in. But to do that, I needed a new plan B - for me, it’s a company scaled down to profitability. Scaling the business is hard, there’s a big chance you’ll fail, so every time you plan another stage, another round of funding, entering a new market, ask yourself: What is my plan B? What if it fails? And make a plan for that. When the crisis comes, you have your assumptions, you can evaluate your options, you have more time and more measures to use to your advantage.

Knowing that if we fail to scale, we can get back to being a smaller agency, get back on our feet and attack the growth again lets us make bold decisions.

That is how we have saved our revenues during Covid-19, we have dropped business-as-usual as early as in March, and we adapted to the new situation before it hit us.

Having backup plans, being okay with failure is what lets us make such bold moves.

This time, we were lucky but the backup plan gave us the peace of mind we needed to make sudden changes.

I’ve been following this rule for years now and it helped me get back on my feet after the hardest of crises. This is what enabled me to go all-in into international sales even though I knew nothing about it and to change my company from a local all-around dev shop lacking USP to one of the leading AI development companies in the world.

It was a crazy move. But I was okay with failure and just as today, we were lucky. Right now more than 90% of our revenue comes from export.

What I want to say is that if you’re considering taking a second mortgage to save your company - make sure you have a place to live if things go sideways. This way you will maximize your efforts to win instead of focusing on saving your apartment. If you go protective about it, you will have it much harder to make bold, risky decisions that can save your business or even make you thrive.

That is why your backup plan is so important even though you hope never to use it. When you face a risky decision, it gives you the point of reference and the courage to take a leap of faith. It gives you the peace of mind to think outside the box, it lets you make radical changes faster and win against all odds.

If you want to win with the crisis, start with plan B. If you want me to share how having a plan B let me win with micromanagement - let me know in the comments.