COMMENTARY
Businesses must plan how to survive Iraq war
By Jeff Bloom and Rob Kay
As clouds of war gather ominously over the Middle East, Hawai'i businesses gingerly wait for what could be an inevitable stomach punch.
Advertiser library photo • Sept. 17, 2001
Experience gleaned from the 1991 Gulf War and the Sept. 11 attacks reminds us how fragile and tourism-dependent we are.
Samantha Vo said business was slow at a Pearl Factory booth in the International Marketplace the week after terrorists struck in September 2001. Hawai'i small businesses must begin thinking now how to handle a similar or worse drop in customer traffic.
According to the state's business office, in the month after the onset of the Gulf War, the visitor count dropped 22 percent; in the month after Sept. 11, the numbers dipped 30 percent.
The travel industry isn't the only sector that would suffer. As consumers and businesses turn cautious, virtually all Hawai'i commerce is negatively affected.
How can a manager or business owner prepare for such circumstances?
Dave Heenan, former dean of the University of Hawai'i business school, author and nationally known management guru, advises local managers to take care of any military reservists in their employ first of all, accommodating them as much as possible.
Then, "you'll want to treat war like any natural disaster and keep costs in line, knowing that revenues will surely be whacked." But Heenan cautions business owners against jumping into a fear-induced cost-cutting frenzy. The message is: Don't do anything radical until you see how things are going to shake out. "Be patient and calm in the process," the former Marine pilot said, and "keep the lines of communication open."
We believe communication is key to survival in times of economic peril. Clearly, the Sept. 11 attacks caught everyone in Hawai'i off guard, but the current situation allows us to plan. Among other things, that means establishing clear lines of communication between you and your customers and suppliers.
Let them know you're ready for any eventuality. Once you have a sense of what you're going to do — whether it's reducing staff, cutting business hours or slowing purchase orders — you need to be clear with those you depend on and those who depend on you.
Certainly, a good manager also will go the extra mile not to demoralize staff. If hostilities drag on, and things get bad enough so layoffs are needed, a manager must tell people up front what the plans are, while reassuring remaining employees that you intend to keep them.
Advertiser library photo • Jan. 16, 2003
The psychological drain on workers uncertain about their future can take its toll on a business. People who are worried about when the next shoe will drop are not apt to be focused.
"Talk to your vendors, customers and bankers and get the best information you can," said David Carey, chief executive of Outrigger Enterprises.
It's also understood that when you do trim the workforce, employees tend to work harder — making up for those who were let go. In this situation, you have to be careful not to burn people out.
In the Sept. 11 aftermath, many employees were asked to make pay concessions or absorb reductions in hours. "When this occurs, managers should be willing to share in the sacrifice," Heenan said. You have to engender a "we're-all-in-this-together" spirit.
The challenge is knowing when, how long and how encompassing the war may be, and no one really has that information.
The key to conquering this ambiguity, says David Carey, chief executive of Outrigger Enterprises, is to be prepared. Some businesses, particularly small firms that rely on tourist traffic, will be strapped because of fixed costs and low cash flow. According to Carey, planning for a disaster such as war can make the difference between survival and bankruptcy.
"If we go through a real deep drop in tourism like 9/11, many companies will not have the reserves in the form of human capital and cash to make it through."
According to Carey, business owners have to take stock of their situation and ask tough questions. "You really need to plan carefully in order to survive," said the Outrigger chief. Like a master chess player, a good manager has to foresee what to do in various "stages of pain."
A smart manager should have a clear contingency plan for various scenarios. Know what you're going to do if sales fall 5 percent, 10 percent, 30 percent or even 50 percent, then stick to those plans. These are not pleasant prospects, but you don't want to get caught in a wait-for-it-to-get-better cycle. It may be too late before it gets better.
Carey stresses that you must be aware of what's going on to be in a position to act quickly. That means staying in touch with events and having the resources to help gauge what customers are thinking.
"Talk to your vendors, customers and bankers and get the best information you can," Carey urges. Having resources that can help you understand your customers' mindset is vital.
On a contrarian and more optimistic note, Joe Haas, managing director of CB Richard Ellis, said he was not overly concerned about the economic effects of an Iraq conflict on Hawai'i. When asked what he was doing to prepare, he said, "Nothing."
"Unless it's a very long, drawn-out affair — I'm talking years — we'll be OK," Haas said. He pointed out that the current tourism and economic environment is different than in Gulf War days.
The downturn in tourism then was mostly due to cautious Japanese visitors. Nowadays, because their numbers are down, we won't be affected as greatly.
"Americans will view Hawai'i as a safe place to visit," Haas said, "and the Aloha State may benefit from this."
Jeff Bloom, former U.S. Small Business Administration Small-business Person of the Year, is the founder of CTA, an information technology and human relations solutions provider based in Honolulu. Reach him at jeffb@cta.net or at 839-1200.
Rob Kay is a Honolulu-based public relations consultant and writer. Reach him at rkay@pactechcom.com or 539-3627.
