Japanese is my first language. About 30 years ago, I was researching in depth in my native language about Toyota and Honda to help make Chrysler, my then employer in Detroit, more competitive vis-à-vis its Japanese competitors. There is one distinct fact about Toyota that I remember as if I just learned about it yesterday. Are you ready for this?
It is hard to believe from the success it enjoys worldwide today – or was already enjoying even 30 years ago – but Toyota was nearly bankrupt in 1949. No bank would loan the company any money. Its founder and owner, Kiichiro Toyoda, was humiliated – so much so that, after that experience, he was determined NEVER to have to beg for money. He said something along the lines of, “Banks don’t help you when you need them. Yet all of them want to do business with you when you don’t need them.”
Today, nearly 70 years later, and 6,500 miles away from Japan, as an entrepreneur in the United States of America, I share the exact sentiment and determination to be successful without the help of institutional banks.
Believe it or not, some of Toyota’s best practices were developed as a result of nearly going bankrupt. For instance, the famous just-in-time system – which forces any imperfections within the system to NOT be ignored by the operators and management – was developed as a result of it.
For any company to survive a financial setback, it needs to increase revenues and/or reduce cost.
When I was an employee, I never had a credit-card balance. The steady monthly paycheck made it easy to make sure that I stayed within our means and paid off anything and everything that was charged during the month. Keeping a high credit score, therefore, was a piece of cake.
Running a business, on the other hand, is a completely different animal. The expected revenues may not be received until months later. Your operating costs do not go away, however, just because you’re not being paid. So when this type of situation arises, it makes it imperative that you look at every single item that is costing you money on an on-going basis and decide if it is an absolute necessity.
Making a long story short, not long ago, this is exactly what I had to do. It forced me to cut back on or cut out completely anything and everything other than the bare essentials in keeping our business running. Had our business not experienced such a setback, I would never have taken the time to look at our cost structure as closely as I did. After all, I am incredibly busy running our business my every waking moment, constantly trying to generate revenues.
As an entrepreneur, when you face a setback in your business, you can allow yourself to be distraught for up to one minute, at a maximum. Remember, as I wrote about it in my November 2012 blog post, “kiki” – or “crisis” as it is indicated in the Japanese characters – is nothing more than an opportunity in disguise. Every danger presents an opportunity. The first “ki” is for danger; the second “ki,” opportunity:
Crisis = Kiki = 危機
危 = Danger; 機 = Opportunity
Happy investing!
