Tough talk: what to say about bad news
Knowing how to approach difficult conversations with the various partners in your business (bankers, vendors, customers, shareholders, employees and family members) is a key leadership skill – particularly when business growth is marginal or nonexistent.
Even when your company is doing well, you need to be prepared to talk with these partners and communicate effectively.
Bankers want proof
You may not believe it right now, but bankers do want to lend you money. You just have to prove that your business can back up its promises to repay debts through growth and collateral. Always do what you tell your banker you are going to do. This credibility is essential through good times and bad times.
When profitability is falling behind projections, keep your banker informed. Think of this person as one who provides options for cash flow and long-term financial planning. Keep the bank involved in your business so they think of you as an A client. Approach a difficult conversation like this:
“I’m calling to set up a meeting to discuss our company’s financial picture for the third and fourth quarters. We are evaluating our growth projections and cash flow and we have some questions for you. Your ideas and advice have been really helpful in the past, so we want to keep you informed as we go forward.”
Vendors are like you
Good relationships with vendors can be maintained by keeping in mind that they are in the same economic times as you. They have bills and payrolls to pay, goals and obligations.
Treat them as fellow entrepreneurs and keep them informed about the status of your business. Engage them in your excitement when things are going well and ask for their advice on how the relationship can bring mutual success. Follow through on your promises to maintain a strong relationship.
When times are tough and you are prioritizing accounts payable, consider approaching a difficult conversation like this:
“I want to keep you informed about our business in the coming year. We are evaluating all of our vendors and are seeking feedback from them on how to ensure that they are paid in a timely manner, but also in a way that supports our operations. Can we discuss your account and what would be an ideal relationship for you moving forward? Then we’d like to tell you about our needs.”
Advocate for customers
Your customers rely on you to keep their businesses running smoothly. Retain their business by being their advocate. It pays to be informed on what is happening in their industry and daily operations.
Reevaluate credit terms with all of your clients. You may need to put credit on hold for some until they catch up. Offer options such as pre-paying or installments. Find out if there are service issues over which they are dissatisfied. When you are negotiating, start the conversation like this:
“I have been checking in with all of our customers to see how business is going and if there is anything that we can improve upon for you. We really value your business and want you to be satisfied. However, in the past couple months I’ve noticed that your payments haven’t arrived as consistently as they have in the past. Is there anything that we can do to make this more convenient for you?”
Reassure employees
Shareholders and employees can get nervous about stability and job security in a negatively charged economy. Show strong leadership through regular communication on operating results and new business opportunities. Recognize employees for their hard work and contributions. Reassure your employees that you are counting on them to continue building the company. To communicate the realities of your business situation, start with this:
“We rely on every person in this company to support its success. It’s no secret that we are not growing as quickly as we had hoped, so we are tracking costs very closely as well as performance. Are there some areas where you think we can either cut costs or bring in more revenue? How do you think you can support that? Are there other areas of the business where you would be more effective right now than in the roles you currently perform?”
Around the dinner table
Those who are in business with family members have two sides of the coin to consider – how to keep the business running smoothly and how to keep relations peaceful at the dinner table. When times are tough or bad decisions are made, families need to pull together rather than placing blame.
However, if a family member is the problem, you need extra delicacy and sometimes legal advice. At the first signs of trouble, schedule time to discuss the issues that concern you. Consider bringing along an adviser to begin a conversation such as this:
“We’ve built this business on the strength of our family. I rely on everyone to support our goals and I don’t feel that you and I are on the same page. I’d like to talk about some areas that concern me and get your thoughts on them. Then I’d like to work out some solutions so we are both happy. The ultimate goal is that our business is successful for us and the employees who count on us.”
Margins for error in a tough economy are small. When problems arise, the best response is communication – honest feedback frequently. Listen carefully to the feedback. It will support stronger operations, partnerships and profits in the long run.
