Robert Herjavec, co-host of “Shark Tank” and founder of the Herjavec Group, said the pandemic year reinforced a basic lesson about speed as an ingredient of success: small business owners need to act quickly and make tough decisions to survive.
The speed of decision-making accelerated during Covid-19 in an unprecedented way, but Herjavec says that as the U.S. economy grows and states lift Covid’s restrictions, the decision that entrepreneurs now need to move forward is not to cut or grow carefully It’s time to make a big, optimistic bet on the future. Companies that let fear last will lose.
The “brutally realistic” thinking required of homeowners over the past year is past and the US is entering a boom period that entrepreneurs need to embrace. “I am very, very optimistic,” Herjavec told CNBC at its Small Business Playbook event on Tuesday. “I think we’re going to see one of the biggest [periods of] growth in the economy we’ve seen in our lives.”
The recent CNBC survey | SurveyMonkey Small Business for the second quarter of 2021 found an increase in small business confidence, but only a small one, and a general sentiment reading that remains net negative more than a year after Covid. More business owners expect revenue gains and, in the most affected sectors, such as food, hiring is expected to increase.
“Human beings never think it will be as bad as it will be and they never recover quickly enough,” said Herjavec. “This is what I am seeing now. People are not ready for expansion, being very conservative, not quite optimistic. “
When optimism was the wrong emotion
The “Shark Tank” co-host may be known for his optimism and business confidence, but he did not hesitate to reveal during the CNBC small business event how much fear and uncertainty he experienced during the pandemic, describing his initial emotions of last February as an “unbelievable fear”.
“Everyone said to me, ‘You are a’ shark ‘and you have a big deal, a relatively big deal, but fear has held us back for about three days,” said Herjavec. He cited the advice of his co-host Barbara Corcoran, who used to say that the difference between successful people and others is “not that they don’t feel sorry for themselves, but for how long they allow themselves to plunge into misery”.
“For about a week, I was wallowing a lot. I’m a very tough guy and I don’t have much to scare me about, but business uncertainty can be very destructive. I kind of wallowed for a while, but then I went ahead. “
Herjavec’s main cybersecurity business has been a pandemic winner as more people in the world move online, but he also handles many portfolio investments through his “Shark Tank” businesses and says that a risk during the pandemic was portfolio businesses with “unfounded optimism. “
“It kills a company,” he said. “I’m a very optimistic guy, I wake up every day believing that tomorrow will be better than yesterday and all that, but when you’re facing a crisis it’s about reality, not optimism. … We told these companies, ‘don’t expect the world to end, but be prepared for the worst’ ”.
During the pandemic, many small businesses had problems because they were afraid to cut costs, afraid to go too far. “We saw a lot of small businesses in trouble, saying, ‘Maybe we’ll just fire some … or we won’t have to fire … maybe things will come back.’
Herjavec clarified these entrepreneurs: “We encourage people to take a slightly more pessimistic view, because in a crisis, no one can help you but yourself. … When things are bad, you have to have realistic optimism and we have seen many small businesses simply believe … things will get better. “
But now he says that dealing with reality is totally different. A year after Herjavec and his CFO sat down and analyzed a “black swan” scenario to realistically assess how long they could survive, business owners need to be “completely on the other end of the spectrum,” he says.