Al Levi: Act like you’re going to be in business forever
When times are hard, it can be difficult not to overreact.
Years ago, when I was still working in my family heating business, we would hit rough patches periodically. Sometimes it was just a tough season due to weather, and sometimes it was a rough economy like a few years back. Live long enough and be in business long enough and you’ll have to navigate the crazy good times and the crazy bad times in the roller-coaster ride of business and business cycles.
During the slow times, when I was tempted to cut expenses too vigorously, my dad would remind me, “Your trucks don’t care what type of season you had — they only know they need replacing.” He, of course, was right.
The cost of deferred maintenance is big. The techs in trucks out there working are akin to a rolling cash register. Pushing trucks too far was inviting higher and higher maintenance costs and, even worse, a truck off the road, which was like a cash register out of action.
Class was always in session with my dad, who never went to business school or attended much in the way of industry training. He was smart and figured it out. He coupled that with the desire to succeed and his ability to work hard and put in the many hours required.
He had grown up on a farm, and he somehow had the farmer’s prospective that if you plant seeds in fertile land and tend to it with hard work tied to patience and persistence, good things will happen. I, on the other hand, was a born-and-bred city boy who was always in a big rush for results.
One day, I was telling my dad: “We need another salesperson. But, we may not have enough sales to support that decision, and it will cost money.”
My dad proceeded to say: “So, you’re saying we need another salesperson, but you’re also saying we don’t have enough sales, and there might not be enough money to hire that salesperson. But, we can’t get more sales and more money until we have another salesperson. So, tough decision, huh?”
A big grin spread across his face. He drew a slow breath.
“Son, sometimes you need to stand on the edge of the bridge and trust that you can make the jump and survive the fall or you won’t ever make any progress in life or in business,” he said.
Dad’s lessons about business — and life — were many, and one of his most impactful teaching moments was when he said to me: “Act like you’re going to be in business for a while. The decisions get easier when you do.”
My dad and his partner, my uncle, lived by this creed. They had been through many tough times much like many business owners had. They started out of my grandfather’s tiny gas station with no money in their pockets and went on to build a business that is now onto the fourth generation. They always tried to run a lean company and avoid the trap of spending too much during the good times because they knew the bad times could be right around the corner.
The two of them always paid up for the latest in technology if it meant they’d be more efficient. That also meant paying up for better trucks than they could easily afford. My dad shared that he and my uncle felt if they were going to bet on something it was going to be on themselves and their ability to keep growing their business.
My dad and uncle did a great job of avoiding the common tendency which is to cut too severely in a slowing economy. Actually, they would get aggressive and use what they had saved up by not overspending in the good times to pick up strategic acquisitions, things that would go on to help them leap forward in dramatically growing the company and making money. This was especially so when things inevitably turned around. They also used this part of the down cycle to buy new technology and marketing for a whole lot less than when the economy was red hot.
I believe as partners they were able to act this way because neither of them were short-term thinkers, and they had an unshakeable faith in their abilities to invest in their company for the long term. They worked hard to make sure they had given themselves the best chance that it would work out the way they both had envisioned it.
It’s easy to think and do as other business owners are doing both in good times and in bad times, but just like stock market investing, the “herd mentality” is usually the wrong mentality for the long run.
I, too, trusted that what I was doing was the right thing and that I’d do all that was in my power to make my bet pay off. And, thankfully, the industry and those I’ve been lucky enough to be entrusted to work with have made that decision of mine the right one.