Are you looking FORWARD to the next recession? Yeah, you read that right! Most business leaders coast through strong economic times, never braking to create a plan for the next downturn. What they don't realize is that recessions are unpredictable. If your biggest customer leaves or your best employees start a competing firm across the street, YOU ARE IN A RECESSION. The savvy entrepreneurs are the ones making plans now, so they can be buyers when opportunity knocks. They're looking forward to purchasing failing companies and hiring top talent when others are caught unprepared by a recession. In Rock the Recession, Jonathan Slain and Paul Belair get you ready to pounce! Using the Recession Gearbox model, you will learn to: Assess your readiness for the next recession Tune-up your business and personal finances Race to capitalize on other's mistakes Accelerate past the competition Through careful research and personal stories of business owners who grew during the Great Recession, you'll learn how to thrive when everyone else is trying to survive.
1. Rock the Recession
Jonathan: I Survived the Great Recession by Borrowing a Quarter of a Million Dollars from My Mother-in-Law
Yes, you read that right. I had no plan in place for the recession. I owned a number of franchises of something called Fitness Together. These personal training studios did great at first-we grew very fast, opening several new locations. Our studios achieved new franchise records every year. It felt like we couldn't miss! In 2008, we set a world record for the most personal training sessions ever in the history of the franchise, and later the most locations ever. We just grew and grew and grew.
Until we ran into the Great Recession.
The only reason we survived at all was that I borrowed over $250,000 from my mother-in-law. Amazingly, I'm still married, and I have paid back what I owed at this point. But it was bad. I wasn't prepared whatsoever: I hadn't been monitoring any of the gauges on the business. Because I had no plan for what to do when the recession hit, I spent the first couple months curled up in the fetal position in the corner of my office.
I couldn't pick my head up-everything collapsed so fast. I wasn't thinking clearly; I was too emotional. Every week, I had to call my mother-in-law for more money. The $250,000 wasn't one big loan. I asked her for $20,000, and then $20,000 more, and then another $20,000. I just kept coming back, week by week, probably a dozen times or more, until she had lent me over a quarter of a million dollars total. I still remember those agonizing phone calls.
Hey Anne (that's my mother-in-law's name).the girls are great.yep, really doing well.your daughter is also doing great.
So I was calling because I was hoping.
I was hoping you could send me another check, so I can make payroll again.
Can you imagine? It was terrible all around. I felt like I was getting waterboarded by the recession. To complicate matters further, mine was a family business. I had three brothers-in-law, a sister, and a sister-in-law all in the business. Once we reached a certain point during the depths of the recession, we had to make some terrible decisions about who was going to be let go. There was no choice: we just couldn't afford to pay everyone anymore.
Up to this point, our journey had been a happy one. We had started with one location and grown rapidly to five. But then the Great Recession happened-and the wheels came off. The worst part was the emotional toll it took on all of us. Personally, I went through a series of emotional stages: first, feeling like a failure, then questioning why this had happened to me and how I got there. I felt raw and exposed, like all my insecurities had been put on display. My self-worth had been tied up in the business. It all just made me feel like I had failed.
Studies have shown that during a downturn people gravitate toward junk food and tend to overeat. In Alabama, a state that was hit especially hard by the Great Recession, an already alarming obesity problem became even more severe, according to AL.com. I may not live in Alabama, but I can relate. When you're scared and numb, you need something to grasp onto. It is a terrible feeling.
My self-worth had been tied up in my business. I felt like a failure.
Luckily, I had a wife and a mother-in-law who believed in me. But trying to figure out what to do about all my brothers-in-law was so difficult emotionally, especially knowing we were all going to have to be together at Thanksgiving. I was the keystone of the family business, the one who had brought everyone together in the first place. I felt responsible for what had happened-I needed to figure out a solution to preserve our increasingly strained relationships.
Ours was a typical family business, and we had made all the mistakes that family businesses make. Because we had no plan, there was no path to save ourselves that didn't involve much pain and emotion. I just remember us having so many arguments with everyone, including me, trying to place the blame on someone else.
Looking back now, I see that I made a colossal business mistake-I clung to our one and only service, our one skill as a company, which was one-on-one personal fitness training. To be fair, no matter what I did, I would have still been swimming against the current. Personal training is probably the worst thing that you can try to sell in a recession when customers are tightening their belts. Nobody wants to pay for personal training in a recession (I can say that now, with 20/20 hindsight).
Nobody wants to pay for personal training in a recession.
But if I hadn't been so busy fighting with my family and battling my own demons, I could have pivoted and expanded into other services, like group training. If I had established a plan in advance, I would have been able to lower my prices before it was too late and keep more clients. Or at the very least, I could have limited the borrowing-and wound up owing my mother-in-law a lot less than $250,000!
I also ponder what would have happened if I had been able to read a book like ours back in 2007. I might have been in a much better place. Obviously, that didn't happen. But what did happen was that my path crossed with Paul's. After initially coming together through the Young Presidents' Organization (YPO) and Entrepreneurs' Organization (EO) mentorship program, he randomly became my mentor for a year. It was the start of a friendship and partnership that has now lasted close to a decade and is still going strong.
During the past eight years, Paul and I have worked with many of the same clients. We have helped them build value, gain traction, and grow profitably. At some point, I also tried to find resources to help our clients prepare for the next recession. But there was just nothing out there. Nothing on Amazon, nothing on Google for "recession workbook." I said to Paul: "Somebody should really write a book about how to plan for the next recession."
It dawned on us that maybe we were "somebody." We started putting together our own recession workbook for clients-the Rock the Recession Owner's ManualT-and the feedback was overwhelmingly positive. We realized there was a much larger audience for this message. For reasons that will soon be made clear, Paul was proof that our system worked. His plan-and the process he created-became the foundation of this new Recession Gearbox Model that we began sharing with clients and speaking about publicly in our talks and workshops.
Now, with this book, we are sharing everything we have learned along the way-everything you need to know about how successful leaders prepare for, thrive during, and create wealth after downturns.
Our process-the methodology we are putting forth here-can be used at any time, whether there's a recession or not. Furthermore, when we talk about a "recession," we don't just mean a broad economic downturn. A recession can refer to any big shock to a company's system.
When you lose your biggest customer, you're in a recession.
When your best employees leave to open a competing business across the street, you're in a recession. When your key vendor or key supplier cuts you off, you're in a recession. When your partner embezzles from you, you-my friend-are in a recession!
All of which is to say: if you're in business at some point you're going to experience a recession in one form or another. It's guaranteed. That is why, no matter how healthy your business is, or you think it is, you should consider creating a recession plan as part of your basic business hygiene.
Paul's business, Roth Bros., Inc. (Roth), had a plan. He was looking forward to the recession. He had purchased a company and done very specific things to grow it spectacularly, using the Great Recession as fuel that led to his American Dream Exit.
Me? I was only in the personal training business in the first place because my brother-in-law happened to be a fitness guru and I wanted to retire from the investment-banking world. I had no plan for when the recession hit, and our business crashed-almost fatally.
Ours is a tale of two businesses merging onto the freeway right before the Great Recession in 2008. One zoomed ahead and the...