“I was taking home $50k in profit annually from that one customer and -poof- it’s gone,” a friend named Jack told me. Last week he lost his largest customer to his main contractor, who went behind his back to cut him out of the arrangement.

We’ve lost customers in the last six months too and many businesses in the agency and professional services industries had a tough 2023. The market is contracting. Companies, ours included, have been reevaluating their costs and leaning out their expenses to adjust for inflation and the ever-increasing competition. The catalyst for the situation with Jack losing his customer was actually a forensic accountant visiting his customer’s company to audit their expenses.

So what do you do in a bear market? When the winter returns again?

I once read the advice from a business wonderkind to sell down market in a down market. The rationale was that there’s always something to sell. In a strong market you might sell premium, in a bear market you might sell efficient.

This is true, as far as it goes. But you wouldn’t want to execute this strategy from the same business. If BMW created a budget hatchback to match the tough times they’d destroy the value of the rest of their fleet.

Really, what you want to do is to invest in Zoom and sour dough starter kits before Covid hits. Then when your main business craters, you can live off your Zoom interest and tangy-loaf proceeds.

I realize that you’re not psychic and that you can’t predict what markets, services, or products will do well in tough times (wait: did you know I was going to write that? Maybe you are pyschic.) What you can predict though, with 100% confidence, is that there will be tough times. I described the bear market as the “winter” above, because winter is seasonal, cyclical, and certain.

When your environment changes, which it will, your ability to benefit from that change is limited by your luck and your options.

Some part of your work as an entrepreneur, in any season, is to develop your options. Because options are the only currency that luck consistently accepts in exchange for her favor.

Your options to survive, or thrive, during a winter might be:

  • A war chest of cash
  • A side hustle or gig
  • Another business
  • A spouse with a great job
  • A little casita on the Mexican coast
  • A diverse business network that spans markets
  • A valuable skill in a different market

When I asked Jack about his main lesson from being cut-out he told me that it wasn’t to have a non-compete in place. Instead, he said that when he thought about his role in the situation, what he realized was that he should have been more aggressive about marketing his new business so that the $50k/year loss didn’t hurt as much.

Jack has two businesses: the older services firm that took the ding in profit and a new coaching business. Because he’s had a stable source of income through the services firm in the good times, he hasn’t had to push as hard on the new coaching business. But that changed last week when he lost that customer.

It might be too late to fallback on a wait-for-change option or double down on a this-is-growing option. But it’s never too late to develop your options.