Pine tree broken by high winds
One of many pine trees broken off by high winds
A windstorm came through central Colorado last month. The wind meter at the airport clocked gusts of up to 79MPH, breaking the all time record.

In my neighborhood, I counted 8 broken-off ponderosa pines as I drove down the main road the next day.

There was one tree with a five foot diameter trunk, broken completely off. That tree had to have been hundreds of years old.

They couldn’t bend enough. So they broke.

Most businesses these days feel the economic gales pushing against their trunks.

Bend, don’t break.

Do you need a cash infusion to give more flexibility until cash is self-sustaining through your operations?

Do you need to restructure or renegotiate some debt so the wind doesn’t push as hard?

Do you need to find a consulting CFO to review your books to see if there are costs or expenses that are disproportionately high for your kind of business?

Do you need to change your approach to customer terms and collections so that the cash comes in quicker?

Do you need to prune off departments/locations/branches that cause stress to the whole organization?

We’ve had to do that. We’ve gotten out of some business areas that were not at our core and that were not very profitable or strategic. That helped.

Bend, don’t break. And here’s to to the hope that the wind won’t blow as hard in 2012.

I was talking to a software entrepreneur friend the other day. We were comparing notes on how our businesses were faring during the Great Recession.

My friend said that these days, his business is ‘hunkering down’ and just surviving. If the bills are getting paid and the doors are staying open, that is enough for now.

I’ve had recent conversations like that with other small business people I know in banking, transportation, hospitality, and manufacturing.

The thing he said that encouraged me, though, was this: Once the economy opens up again, there will a marked reduction in the number of competitors in his market. Not everyone will survive. But if you survive, there will come a day when suddenly increased demand coupled with reduced supply (of vendors in the market) will make for a very good business environment.

I think that scenario rings true.

So for many, it’s time to hunker down, survive, and be ready to aggressively expand when the opportunity (someday) comes.

What do you think? Is it time to hunker down, close up shop, or expand now?

At lunchtime, I had a bit of a dilemma: eat the grapefruit, which was what I really wanted to eat, or eat some strawberries, which are more expensive and which spoil faster.

I felt slightly guilty about letting the strawberries potentially spoil, so I grabbed them.

But then I heard in my mind the words of my old University of Texas economics professor: “Sunk costs are forever sunk!”

That simple sentence means that if you’ve paid for something, that decision is done, and it should not emotionally effect the decisions you make now. I paid for the strawberries, and that’s not going to change, whether I eat them or not.

What’s my goal? A pleasant meal. The meal would be nicer with grapefruit rather than with strawberries, given my current mood. So I should not let the cost of the strawberries drive my decision.

We encounter this in small business all the time.

“I spent a fortune to hire that guy — I can’t fire him now!”

“We spent a lot for that machine. I don’t care that it’s worse than what we did before, we can’t afford to just stop using it.”

“We’ve invested years in that product…we’ve got to make it profitable.”

No. No. No.

Sunk costs are forever sunk. What we chose to do in the past — what we spent in the past — doesn’t matter now. What we choose to do now should be what will advance our goals now.

Oh and by the way, I put the strawberries back in the fridge and ate the grapefruit.