In a volatile economy, starting or running a business can be a high-stakes game, where one wrong move could see your operation go under. As inflation continues to climb and consumer spending slows to a trickle, many businesses are spiraling into panic about the future.
The countless decisions involved in running a business suddenly take on a new and frightening dimension. What if this product doesn’t sell? What if our suppliers increase their prices? Should we expand into a new market or stay put? Soon decision-making paralysis sets in, and businesses become sluggish and lose their innovative edge.
45 percent of business owners had experienced anxiety over the past 12 months.
According to research, business leaders can be an anxious bunch. In one study that sampled more than 1,000 small and medium-sized enterprises, it was found that 45 percent of business owners had experienced anxiety over the past 12 months, with 24 percent of them saying it had led to depression.
Fight or flight: The psychology of paralysis
Tied in with this anxiety is a pervasive sense of stress triggered by years of disruption from the COVID-19 pandemic, supply chain and labor shortages and, now, economic uncertainty.
It is in this kind of environment that the fight-or-flight response starts to take over. As an automatic physiological response to stress, it primes the body to take action in the face of imminent danger by triggering the sympathetic nervous system to either fight, flee or freeze.
Though fear and anxiety are both normal reactions, it isn’t so healthy when it cripples decision-making.
What originally evolved to protect us is now capable of doing harm. Though fear and anxiety are both normal reactions, it isn’t so healthy when it cripples decision-making and stops leaders from taking action.
Sadly, research shows it’s common for leaders to react poorly in high-stress situations. In times of crisis, one study found that 43 percent of leaders became more angry and heated and 45 percent ignored and rejected new information rather than listening or seeking to understand.
It’s clear that the impact of such behavior has the potential to destroy an organization, killing employee morale and hurting performance in the most challenging situations. As hard as it is, business leaders must hold on to their sense of perspective and maintain positivity.
A change in outlook and reframing the situation helps. After all, the big picture is there’s never a perfect time or environment for anything that involves an element of risk. Businesses should neither expect nor rely on their operating environments to stay the same if they want to survive.
An exceptional leader will keep a lid on their emotions and choose to act with purpose rather than react to circumstances.
Consistency and conviction
Instead of allowing themselves to be overwhelmed, leaders should factor in unpredictability as a matter of course. Economies go up and down, distribution models and supply chains experience disruption, but one thing that must stay constant is the consistency of a company’s products and services.
It’s been found that, in difficult times, consistency boosts performance and wellbeing. It provides stability and deepens relationships with customers. In times of stress, consumers value certainty and seek reassurance. Businesses that meet their needs will be the ones with the competitive advantage.
It’s been found that, in difficult times, consistency boosts performance and wellbeing.
The other half of the magic formula, conviction, is a tricky beast. Many leaders have been affected by the dreaded ‘impostor syndrome’, which happens to plague the likes of Michelle Obama and Mike Cannon-Brookes. Estimated to affect up to 82 percent of people, the feeling of being exposed as a fraud overshadows our success and eats away at our conviction.
But it is conviction that drives action, narrows our focus and gives us a sense of purpose. Research shows the differences in performance associated with conviction are often as large, and sometimes even larger, than differences due to exemplary skills alone. It is this quality that leads entrepreneurs to succeed against all odds.
What do Uber, Apple, Microsoft and IBM have in common? The answer is they were all founded during a recession and their vision was backed with a conviction that was unassailable.
Overcoming fear response
There are many ways to negate the effects of decision-making paralysis. It all starts with a commitment to ignore the fear that comes with the responsibilities of being a leader.
Bulletproof your products and services
If you’re feeling insecure about the future, it’s essential that you look at perfecting your products or services. There’s always something to improve. A weak offering won’t entice belt-tightening consumers who, now more than ever, expect value for every dollar they spend. Ask questions of your customers, strengthen relationships with suppliers and try to hold onto valued staff to guarantee consistency.
Revisit your business plan and strategy
Revisit your business plan and strategy for the next 12 months and beyond. Is your business model sustainable in a recession? How do you anticipate the operating environment will change in 12 months or 24 months? Thinking ahead, staying open-minded and adaptable will mitigate decision-making paralysis.
Identify your core goals and mission
This leads back to the importance of having conviction. If you don’t really believe in what you’re offering, you can’t bring others onboard with you. Looking into what your core goals and beliefs are will eliminate inertia and propel your success.
“War-game” all possible outcomes. What would happen in the worst case scenario? What are the most likely developments on the horizon? Thinking ahead and then preparing for it takes away some of the anxiety and fear associated with a volatile economy.
Narrow down your options
When confronted with too many choices, it helps to whittle down the list to just two or three. Leaders can consult experts or speak to trusted advisors or team members if they’re feeling stuck. A fresh perspective, more research and taking more time before deciding can take away some of the risk of making the wrong choice.
Take smaller risks
If possible, take steps to minimize negative outcomes by investing less on new or risky initiatives. Order a smaller quantity of products, sell to a test market or send out samples and ask for feedback first. These are all ways to investigate new avenues without going out on a limb.
Difficult times are the crucible that hones a company’s edge. Rather than allowing paralysis to set in, leaders have a rare opportunity to discover their hidden strengths and talents.
Provided they don’t do too much damage, mistakes are often useful indicators of where weak points lie. Letting fear of a mistake get in the way of action is a fast way to stall growth and lose momentum. Don’t allow decision-making paralysis to hamstring your company’s growth.
Rohan Widdison knows that beauty is more than skin deep. The Chief Executive Officer of New Laboratories has 34 years of experience in the sector with a demonstrated history of working in the cosmetics manufacturing, formulation & distribution industry.