During a crisis, key decision making is vital to the success of your business.
Leaders know that making the right decisions in normal circumstances can be challenging enough, but in unprecedented times when information, time, and resources are limited, it can feel almost impossible.
When you have incomplete or imperfect information, lose focus, feel rushed because you are busy putting out 'fires', or don't have the means to respond to the situation, you can feel pressured to make decisions out of desperation rather than considering the possibilities. Looking back after a crisis, the solutions may be apparent, but when you're in the throes of a crisis, it is hard to make the right decisions.
Winston Churchill is credited with saying, "Never let a good crisis go to waste."
To offer you insights and inspiration on how you can re-invent yourself during a crisis, here are three stories of business owners who took bold and decisive action at a time of deep economic uncertainty.
1. During the September 11, 2001 crisis, Sunny owned a bankrupt business and four years later sold his company for $85M.
During the days that followed the terrorist attacks of September 11, 2001, most Americans believed they were at war. The crisis paralyzed owners who wondered what would become of the world. Spending stopped. The stock market tanked. At the time, Sunny Vanderbeck owned and operated a web hosting company called Data Return and had just seen a $1 billion acquisition offer from Compaq go up in smoke. Vanderbeck took stock. Data Return was burning cash, and Vanderbeck figured they had six months to get a deal done before they could face mortal danger. He continued to look for a buyer and soon received another offer from a technology consulting and software business rolling up IT services companies. Vanderbeck agreed to sell Data Return in return for stock in the IT services roll-up.
Soon after the transaction closed, Vanderbeck realized he had made a mistake. He recognized that his company's acquirer was suffering the consequences of a buying spree, during which they had made forty recent acquisitions. Data Return's acquirer had bitten off more than they could chew, and a little over a year later, they declared bankruptcy. Vanderbeck had fallen from being just days away from a $1 billion payday to owning shares in a bankrupt business. He still had his original Data Return partners and investors who believed in him, so Vanderbeck assembled his team again and bought the assets of his former company out of bankruptcy for $30 million. Four years later, Vanderbeck sold Data Return to Terremark Worldwide in a transaction valued at $85 million.
2. During the 2003 “jobless recovery” crisis, Dick saw the potential to scale.
In 2003, the most common term used to describe the state of the economy was the "jobless recovery." The year began with concerns about the war in Iraq. The Dow Jones Industrial Average fell below 8,000 in February. Mortgage rates plunged to 30-year lows, and homeowners rushed to refinance. George Bush cut taxes hoping consumers would start spending. It was against this backdrop that Joshua Dick took over his father's company.
Urnex was generating less than $1 million in annual sales across seven product lines. Dick re-trenched and jettisoned six of the seven product lines to focus his limited resources on the one product that Dick thought had the potential to scale: cleaning supplies for commercial coffee makers. In other words, a niche of a niche. Dick poured all of his limited resources into becoming the best in the world at one thing and ultimately grew Urnex to more than $5 million of EBITDA, which is when he decided to sell for a double-digit multiple.
3. Moore re-invented his business during the 2008/9 recession; ten years later, Moore had 75 employees and an offer to buy his company for $50.6M.
The Great Recession that began in 2008 was a time of massive disruption. Stock markets around the world were dropping hundreds of points a day. Banks were failing. Many, including John Moore, thought the world might be ending.
Moore is the founder of 3D4Medical.com, a company that created three-dimensional models of the human body, photographed them and licensed the images to textbook publishers. When the Great Recession of 2008/9 hit Ireland, Moore's business took a significant turn for the worse, and he realized he needed to re-invent the company. Moore decided to offer an application that students could use to learn about anatomy. Instead of focusing exclusively on textbook publishers, they started selling their app directly to students, teachers and medical professionals. The business began to hum as more Universities – including the likes of Stanford and Cambridge – signed on. By 2019, 3D4Medical was up to 75 employees, including a reliable management team. Moore was making plans to continue to grow the business when one of the biggest textbook publishers in the world made an offer to buy 3D4 Medical for $50.6 million.
Realizing that help is needed was key to John's success. Changing his business approach was key to achieving his goals despite all of the uncertainty at the time.
Here are some key takeaways on how you can re-invent yourself during a crisis.
- Get the knowledge and assistance of others when making a major business decision.
- The Urnex story shows that diversifying over too many areas will detract from the one area where you really have a chance to excel.
- Realizing that help is needed was key to John's success. Changing his business approach was key to achieving his goals despite all the uncertainty at the time.
Are you interested in learning how to re-invent your business to stay competitive and build value? Book a free consultation.