During the 2007-08 financial crisis, I was a financial advisor to families and business owners. As you’d expect, the period was marked by uncertainty as established financial institutions were failing or on the brink of disaster.
I was personally responsible for a billion dollars of relationships for the firm, and most of my clients were leveraged in some capacity. As a result, I constantly found myself walking the tightrope between having a credit relationship with a client and managing their assets.
One of the great lessons of the crisis was the importance of staying in touch.
While it would have been easy to hide under my desk, continuous contact with clients was key, even if I was simply checking-in via phone or email. This required sensitivity, but ultimately, the most basic touch point could yield a broader breakthrough – whether that meant a better understanding of a client’s financial outlook or a proactive credit or asset reallocation opportunity. In the end, every client pulled out of the crisis and found themselves better off in the long run.
When companies, clients, and their strategic partners openly communicate and express their concerns and intentions, it can also make all the difference in a crisis.
If your business is navigating economic turbulence, consider the following:
Your clients probably haven’t internalized the issues you’re facing.
Clients need reassurance that your product or service will be delivered as usual. If those commitments can’t be kept, clients need to hear why and when they can expect fulfillment. Setting expectations, based on the best information you have at the time, is good practice.
Your employees need clear guidance.
You may have had numerous budget reviews and strategy sessions, but most of your staff probably isn’t in the room. They need to hear what you’re doing about the situation and how it may impact their livelihood. The news you share may not be good, but usually, it’s better than silence. Your people are going to talk and share opinions about what’s going on. It’s important to send a clear message from the top.
Your financial partners need to know your challenges.
In times of crisis, institutions, and non-bank lenders have been willing to strike forbearance agreements, make loan modifications, or provide other solutions, including short-term funding. But, if you’re seeking support, don’t wait until you miss a payment or find yourself in an unmanageable cash crunch. Timing and candor are critical. When you leave your financial partners in the dark, they may read the situation incorrectly. That can have consequences.
Your management team needs to know your position on all the above.
You can’t be everywhere. Your top associates need to be informed and properly empowered to communicate on your behalf, whenever necessary. Heightened anxiety may complicate the moment, and your management team may not be able to convene as normal, but don’t let that stop you. Utilize all available communication tools, and be ready to put additional backup and redundancy plans in place. It takes a consistent, unified leadership team to effectively manage a crisis and build peace of mind across your entire workforce.
During difficult times, everyone is feeling additional stress. While it’s not your job to be their therapist, you can give them clear messaging around your situation. This level of radical candor isn’t easy, but it’s your job to weather the storm as well as possible.
The more you can keep an open dialogue, the less you leave up to speculation and the anxiety of your stakeholders. And, when your maintain relationships with your stakeholders during difficult times, the stronger the relationships will be once you pull out the crisis.