Inspiring Business Stories: 5 Companies that Survived Tough Financial Times
November 17th, 2020 | Small Business Resources
A pandemic is not the only crisis that can thwart a business’s financial success. Calamitous accidents, mismanagement, economic volatility, and other hazards can threaten your company’s trajectory.
The good news is that you can learn from other business leaders who have weathered various storms. Here are five true, very inspiring business stories to help you do exactly that.
#1. Topping the list of inspiring business stories: Wild Detectives Bookstore
In 2020, the unforeseen pandemic forced a small Dallas book shop to close its doors. Wild Detectives was the pre-pandemic place to be. How would they survive a sudden lockdown?
Their solution: find another suffering industry and fill the need
Founders Paco Vique and Javier García del Moral knew their industry wasn’t the only one suffering. They knew that their customers missed traveling, too, and decided to launch an online “travel agency.”
Now, for the price of a paperback, the booksellers offer to “transport” you to Shanghai, Havana, Asuncion, Stockholm, or heck, the Vatnajökull glacier.
Within a month, the bookstore doubled sales and attracted thousands of new customers that wouldn’t have ever known their physical store existed.
Wisdom and application for your small business: Creativity can keep you afloat
Most pandemic pivots simply meant small businesses “went online” or opted for a socially distanced version of the same business they’d always conducted. Real creativity, though, the kind that will double your sales, means combining your solution with a service that answers multiple pain points.
#2. Tragedy turned tasty: Smokey John’s Bar-B-Que
Three years ago, a tragic fire took out pitmasters Juan and Brent Reaves’s main source of revenue: their commercial kitchen. Smokey Johns had been a community icon for over 50 years; the brothers weren’t about to let their sudden financial troubles smoke their future.
Their solution: pivot to events
Brent, Juan, and their team chose not to wait around for the restaurant restoration — they got to work catering events. Taking action was almost as difficult as starting a whole new business, but the team stuck with it. Today, catering is still a large, lucrative part of their operations. They also began selling their secret sauce and rubs online.
Wisdom and application for your small business: Diversify intelligently
What can you learn from inspiring business stories like Smokey John’s? First, revisit your insurance policies yearly. (This could have prevented the Reaves’s need to pivot.)
Second, when you diversify, do it intelligently. The Reaves family didn’t decide to make greeting cards or sweep chimneys. Their broadened horizons were wisely measured against what they were already known for: good barbecue.
And finally, again, get creative when tragedy strikes. Be ready to hustle like you’re starting a whole new business. Because when things normalize, you may have a new profitable vertical to nurture.
#3. The perspective change that saved BuildDirect.com
Various economic ups and downs combined with complacency forced BuildDirect to the brink of collapse. Jeff Booth, the founder, was trying to navigate his company through the dot-com crash and then the economic volatility that followed the events of 9/11.
Their solution: view the crisis as a gift
Booth looked at the situation with a mindset that other business leaders neglected. He chose to see his troubles as an opportunity. “No one invites a crisis, but handled well, it can be what your company needs,” he later wrote for Fast Company.
In looking at their troubles through the lens of opportunity, BuildDirect’s leaders found a “gold mine” of data that tipped them off to market intelligence no other competitor had (or could get). Remarkably, the data allowed them to predict geography-specific demand and respond to it before it appeared in traditional media. The team exploited their competitor’s blindness and met demand before anyone else could.
Now in its 19th year, the company is stronger than ever.
Wisdom and application for your small business: Your mindset matters more than you realize
Positive thinking is not denial. In fact, it’s the opposite — it’s the same “hunger” that caused you to create a business where, before, there was nothing. Research links optimistic leadership with the performance of a leader’s followers as well as job satisfaction — factors that’ll directly affect your ability to recover from trouble.
Tactically, seek different or better intelligence constantly. Do not look at the same data every day. This may mean you need to bring in a new set of eyes by hiring a consultant. Or perhaps you should toy with new analytics tools. Neat offers a free fifteen-day trial, with which business owners can quickly capture, parse, match, and store their financial transaction data. The automation paves the way for a remarkably insightful financial snapshot every time you open the app. This type of visibility may be key to your ability to see new opportunities within your business.
#4. The sweetest, most inspiring business stories taste like Hostess cakes
In 2004, and again in 2012, Hostess, maker of tasty treats, faced the same crisis: poor management and lack of leadership. In the 2000s, consumers’ interest in foods changed drastically.
Source: First We Feast
Instead of responding to and accommodating the disruptive, data-backed trends, Hostess ignored consumer behavior and doubled down on producing various cakes. The business’s leadership kept propping up an overleveraged business model with runaway payroll costs, cutting into already slim profit margins.
When they did react, it was too late, which meant many options were gone. Executives chose to impose “‘draconian cuts’ to wages and benefits,” further hurting brand perception — both internally and externally.
Their solution: a smaller, more dedicated product offering (and team)
Finally, Hostess Brands cut the bloat and decided to stick with a smaller but more diverse selection of products. Instead of 150 medium-quality items, they chose to offer consumers 90 delicious, premium items. They also right-sized, opting for a team of 1,170 dedicated employees instead of >8,000 disengaged workers, a move that changed their whole culture … and trajectory.
Wisdom and application for your small business: measured modernizing wins
Hostess could have prevented — instead of remedied — their troubles. How? By listening to customers and caring about the trends.
Competitors noticed research-backed health- and food-sensitivity patterns and responded in word and deed. Meanwhile, Hostess was distracted with too much debt and insufficient risk mitigation tactics. The combination of factors put them in jeopardy — a lesson business owners can apply to their own planning.
Focus on misstep prevention to reduce the need for recovery measures. If you do, you’ll sidestep the sour sorrows these famous bakers had to endure.
#5. CEO escapes a sticky financial situation: AIS Adhesives Ltd.
Himmat Singh was eager to get experience as a CEO. But when AIS Adhesives Ltd. hired him on to lead the company, he didn’t realize what he’d gotten himself into. The business had experienced the following:
- An unfortunate $200,000 per month in losses
- Zero cash reserves
- Stalled, snarled operations
Undaunted, Singh rolled up his sleeves and got to work.
Their solution: people first, then profits
Did Singh squeeze contracts, yell at vendors, or fire team members? Quite the opposite: He focused heavily on restoring trust among all relationships. He rebuilt rapport among banks, suppliers, customers, strategic partners, and employees.
“I also tried to create a culture of accountability, autonomy, and trust,” he recalls. “For the sales team, I did away with timecards entirely. They didn’t have to come to work (a godsend given traffic in India) — just show me the numbers! Since we didn’t have money for salary increases, we gave employees title upgrades where warranted and helped with resume writing and skill-building.”
Within a year, the company had turned around. Sales grew 80%, and the business was profitable once again.
Wisdom and application for your small business
Rebuilding trust costs time and money up front. That investment can feel counterintuitive when you’re low on liquidity. But Singh’s story shows that the cost is well worth it.
Another takeaway is to double-down on differentiating strengths and invest in what’s profitable. “We’d found that one of our three verticals was much more profitable than the other,” writes Singh. “We chose to ignore the vertical that had low margins and was operationally demanding. This freed up resources and fueled a cycle of growth.”
When inspiring business stories become your own
Recall the turnaround tips these businesses gave:
- Exercise your creativity.
- Know your coverage (and reevaluating it regularly).
- View challenges as opportunities.
- Switch up your data analysis.
- Respond quickly to consumer sentiment.
- Keep a cushion of cash.
- Prioritize relationships.
- Invest in your most profitable activities.
These are all things you can do today — before any trouble arises. There’s no need to wait until catastrophe strikes or you realize someone has made mistakes. Implement these “recovery” measures today, and enjoy the benefits of growth (minus the financial misfortunes that these companies had to endure).
Remember: One of these preventative measures can be taken today. Switch up your financial data analysis by downloading Neat, a mobile app that automatically records, parses, stores, matches, and reconciles your financial transactions. The app gives you a nice, tidy dashboard with a snapshot of your most important financial details. Best of all, it’s free for fifteen days, so try it now.
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