MBAC Executive Series with Donna James

Tired.

No, it's a great question, and thank you. It's rare that I get my entire bio shared with a group, so I'll remind everyone: you can do anything, you just can't do it all at once. So fortunately all of those things aren't going on now—they have occurred over a 40-year career so to speak. I really like your question about the perspective pre-COVID and what was going on in my work and then just personally. I try to keep my eye on what's going on at a macro level in the economy as well as at a micro level relative to my business and my personal finances and that of my family's. One thing I became aware of many, many years ago is that the economy runs in cycles. We've been on a cycle since 2008—a downturn, the recession we experienced then. Ten years out, the question became: how long is this uptick going to last? It has been a great ride.

The question becomes: getting the unemployment down, getting so many businesses running and running well, or even if they were struggling, at least seeing where they could get to—light at the end of the tunnel. The question in my mind always was: what's going to happen that's going to change this cycle? Because it never lasts forever, and you always have to think about what do I need to be prepared for in case of a downturn. But it's hard to predict what's going to drive the downturn. Last time it was the banking system and there was little to no liquidity, so you could not get to money. This time around it's COVID, and it's not the banking system—it's that we are a consumer-based economy predominantly, meaning when people are buying, that's when our businesses are thriving. Everything ties into that. From a consumer perspective, when the consumer can no longer buy, everyone is impacted.

So what COVID did, and I think unfortunately appropriately so, it shut things down. You always want to be able to live to fight another day, right? And if people aren't healthy and they are dying and they are not living to fight another day, businesses can't thrive. So the shutdown, the slowdown—depending on where you are in the country—and that's the other interesting thing about this particular change in the cycle of business. State by state it's very different, country by country it was very different. This rolled across the world and it is still rolling across the world, and there is still the threat of the contagion continuing until there is a vaccine.

The interesting thing of thinking about the magic of the vaccine: yes, it will make us feel better, but what it really does is make us confident about going back into the world the way we were before. Getting that consumer, getting individual confidence back up that we can step out and do things the way we used to do them, I think is what everybody's waiting for. But I think what this is, is a moment to be very thoughtful about what may not change, what might we have to live with longer and forever—the downside and the upside. I think one of the upsides we've learned, in some businesses not all of them, is that we don't need people in the office every day. We can buy things online. We can pace how we acquire goods and services over time.

And we are comfortable and have confidence—we can step back into everything from a hair salon to a nail salon to just sitting down and eating at restaurants. Those things are slowly coming back, but we have figured, to some extent, how to get along in this current environment. And the question becomes: what are the opportunities in this current environment? Absolutely we want to take with us into the future—and what are the downsides of this current environment that we want to be thoughtful and planful about for the future so that we don't get caught short again if we got caught short this time? Every business was impacted by liquidity, having enough cash—I don't care how large it was or how successful the business was. Cash became king. It's always king and queen. But in this environment every business hunkered down, stepped back, looked at their balance sheet, looked at their bank accounts, looked at their lines of credit, looked at their debt to say: if I don't have any revenue coming in, there's no top line, I'm not going to have a bottom line. But what do I need in terms of cash flow to stay afloat, and what do I need to stop doing in order to conserve cash?

That has become the driving force. And how do I do it in such a way that I don't devastate my employees? Because one, I need them when there's a recovery—I need those employees back. And from day to day, month to month, companies have not been able to predict—and predicting is a lot about self-confidence down the road—but predicting how long this is going to last, when they're going to rebound. One of my clients is in the medical device business, and their business was pretty much shut down because hospitals were consumed with COVID and they weren't doing any elective surgeries. So anticipating when COVID was going to get sort of under control, understanding it wasn't going to go away and we could start to ease back into elective surgeries, became the big question mark. That is starting to happen, but the question is, for every business—this is where I was pre-COVID, this is where I am today—is it going to be a hockey stick, or is it going to be this deep curve to get back to where I was or even close to where I was before?

I think the process around the CARES Act and the Paycheck Protection—well-intended, strangely executed, because no one had ever done this before. No one anticipated a worldwide pandemic in their worst-case scenarios. Now the possibility of it has been out there and written about, but no one had put in place systems to actually deal with how are we going to get cash to individuals, to families, to small businesses so they can stay afloat, and how quickly can we do this. So the fact that we got to it at all—and the banks, if you think about it—the banks had to respond to the government saying, okay, distribute this cash and we will guarantee these loans. But the bank had to be on the hook for underwriting the loans to some extent, because they were on the hook as well, and they were trying to figure out the rules of the game while the rules were being written—or not written at all, because people were writing after the fact. So I think it was the right action. I understand why it was so complex and difficult to execute from the government and the bank's perspective, but I don't think anyone thinks it is enough in terms of saving small businesses, especially minority businesses.

Just like the unemployment rate is worse in minority communities, the potential for the business failure rate is greater in minority communities, primarily because of cash and liquidity and being able to sustain yourself while you have no revenue coming in and you have no idea how long that's going to take.

So you know, it's hard for me to make a statement and have it apply to everyone. Everyone has to be thoughtful about this because you are dealing with individual perceptions and concerns about debt and so forth. But if you're going to live to fight another day, you need to take the cash. And if you are apprehensive about it, find out as much as you can. Make sure you are in a structure to receive the cash so that it is about your business—it is spent only on your business and the things that are designated that it can be spent on. It requires a level of discipline, but don't be so afraid of it that you cut your nose off to spite your face. Because if you are trying to live, to continue to grow another day, you have to have capital. But you have to have capital for the right reasons. It should be there, of course, for employees. It should be there, of course, I think, to cover maybe lease and rent payments because you're out of your office. If you don't have those types of expenses that the monies can be spent on, give it back. Don't spend it if you secured it.

I think it's not uncommon for small businesses to be apprehensive about debt or equity investors even because of the sense of losing control or the sense of the pressure of having to pay someone back. I get it, but when you step into that world of being an entrepreneur, most successful entrepreneurs grow their business using other people's money, not just their money.

So you got to get over that fear of being in debt in a situation where you have to borrow to sustain yourself.

Yeah, it's an interesting dynamic. That payment won't last long, and because of those implications, I doubt that it'll be extended. Some people may extend it—the government may decide to extend it—but I think what it speaks to are the number of people that aren't making a living wage here. And there in lies the challenge. It's a double-edged sword because if you're a small business, paying a living wage is tough. If you're a large business, it's hard too. You've just recently seen maybe in the last year larger companies raising the minimum wage—raising their wages, I'm sorry, above the minimum wage. If everyone had to, I'm just going to throw out a number, get to paying employees $15 or $17.75 an hour, some businesses could not survive under that, or at least they wouldn't be able to hire full-time employees and they'd have a lot of part-time, and then there would be implications on health care as well. So there's always this balance. But you're spot on—the $600 subsidy is causing some people to stay home.

But for others, even if they weren't getting that, they might try to stay home because they're afraid to work. COVID has impacted the African-American community at rates that are greater than our percentage in the community, and that's primarily my understanding. And God bless us for Dr. Amy Acton—she has been a phenomenal champion of talking about the impacts of COVID, because a lot of folks who look like us—African-American, people of color, brown people—are frontline workers, whether that's in grocery stores, whether that's in health care scenarios. And frontline workers are exposed to people more and have a higher degree of risk of contracting COVID and being adversely affected by it for a myriad of different reasons, all tied to disparities in health care.

When you asked the group earlier, kind of what's the word that kind of expresses how they feel right now, I'm going to say hopeful. I'm glad the governor and his team has asked, but this is not a new issue. We have had health disparities for as long as we've had socioeconomic disparities, for as long as we've had issues of policing, for as long as we've had issues around food scarcity. This is not new. So I'm optimistic because the question is being asked, but words don't matter as much as actions. So it will be interesting to see what actions are actually taken and sustainable action. That's where my head is now, because what needs to be done isn't new, but it's important to sit down, revisit those things, get the input from leadership and frontline folks in the community as to what matters now and what will work. So we will see what this administration does with this, but I'm very hopeful. I'm remaining optimistic.

Yep, two things come to mind. We don't have a choice—we have to figure out how to navigate these choppy waters. And as my friend Stephanie says, we're all on the same choppy waters but we're not in the same boats—we're all in different boats, and so we're experiencing these differently. But we have to, within our own locus of control, locus of community, do what we think makes sense. Don't ever let emotion and passion take you to a place of despair—let it take you to a place of: what can I do? And I don't care how small that thing is that you can do. You don't have to rock the world—just rock your little boat. Because sometimes we're trying to change it all and fix it all. If you think about the protests, if there was only one person out there, no one would care or say two words about it. It is the cacophony of voices—it's the color of the cacophony of voices that is making the difference today. So one voice does matter. So figure out what it is you can do, and what you can't do—that's for somebody else to pick up and run with.

But don't underestimate the power of you—the power of your voice coming from a place of passionate, persistent, wanting to be positive. And you can be positive without tamping down the truth and your truth and your reality of what you deal with. One of the things that I'm managing through are all the folks who want to talk—and talk is good. That's a first step—you have to have someone to talk it through with. I have a lot of white colleagues who have reached out and they want to talk, and it can be tiring. But I told another group: this is an opportunity for education, information exchange that we have needed for a long time. Now they are ready to listen—we need to be ready to talk and to share. Maybe they're ready to handle the truth, and maybe not. But you have to share your truth, and you have to do it from a place of: I want to help you understand as much as you care to understand.

Absolutely, at the end of the day, as Black people, we have been dealing with these issues that have suddenly gotten on the radar of other folks for our entire lives. And as soon as you're tired of talking about it is when people are just beginning to listen. And they may not get it, but there is just this moment that we're in—as painful as it is, it's where growth happens, our growth and the growth around us. So just keep doing what we do. As Black folks, we know pain—that's right, for our greater good. That's why we are still here today. So this is a time to name it and claim it, but do it within your locus of control. Don't feel like you've got to change the world—you just impact what's going on in your world and watch the ripple effect.

I think they're already involved. Anytime you're in service to someone other than yourself, you are involved. The question is: is it passive involvement or is it proactive involvement? So obligation, responsibility, natural course of things in terms of being in business—you are involved. I think the important thing, at least for me right now—and there may be a translation for this for medium, small businesses, and even startups—is what does that look like from your company? So what you have seen—larger companies, everybody's got a press release, a statement about where they stand. And that's great, because silence is consent. Sometimes if you don't talk about where you stand, I'm going to assume you're not standing with me. And what I love about the statements is that they're about standing on the side of justice or injustice, and it's as simple as that.

A lot of companies are saying we're for justice. Words matter, but what you do matters more. So the next thing we're seeing is people putting dollars into different organizations, which I think is great. But you can't buy or pay your way out of this. Are you putting them in the things that will drive change, or into the things that will just keep seeding what's going on today? And here's what I mean by that—it's not a criticism, I just think it's a critical thought or thinking that we have to do in our communities and from a business perspective. If you believe that the societal contract has been broken—the civil society contract has been broken—and you can say it from the policing perspective as an example or disparate impacts in health and economics, then we have created organizations and systems to support people who have been disparately impacted by that broken civil society contract.

So whether it's the Urban League or the Center for Healthy Families, YWCA—we've got lots of organizations organized around, I'm calling it, plugging the holes, putting their fingers in the dam where the water was breaking so that people can live and have wholesome lives. Do we want to put more money into plugging the holes in the dam, or do we want to fix the dam? Do we want to change the course of the water, the trajectory of things? And so we have to be mindful about the construct we have created to help one another and help people who are disadvantaged. Because if we're really serious about changing things and eliminating institutional racism, then we have to be thoughtful about if the money is going to do that or is it going to continue to position us to help where the breaks are.

We need a reset, we need to re-evaluate, we need to be on two tracks in my opinion. Keep doing what we've been doing—that whole analogy of the babies have been thrown into the river and we're down at the end of the river trying to save the babies—or do you go back up the river now that we have this moment and figure out who's throwing these babies in the river? This is easier said than done, but to unwind systemic racism is not a one-check, not a one-fix. And I can sit here and say that, but I have to more than say it—I have to help people understand what does that mean. Because it's my responsibility to understand it, not just the person that I'm chastising or talking about. You're just writing a check—because those checks matter—what's the next step? What's the next evolution of this? And I don't have the answer, but I think that's in part the question we should be asking.

Yeah, I think we have a responsibility to define what we think the new normal needs to look like, so that the folks who are writing the checks and saying, how can I help, can get directed to really where they can help. So what needs to be done to eliminate health disparities? In some instances it might be access to health care, but it may be access to competent, culturally competent health care. So what needs to happen with doctors and training? What needs to happen with health care systems and access to the internet and broadband so that we can access telehealth, which is not just coming—it's here. Stepping back and looking at, okay, that's where the investment needs to go. So it will be different because of the different systems that are in place to deliver services, or the systems that have been placed that are broken where we don't feel fully accepted.

Corporations have been working on diversity and inclusion forever. How do you actually get a workplace set up so that it is truly inclusive? It will not be a perfect fix—perfection is the enemy of progress. It's just got to get significantly better, and with each iteration we learn what needs to be done next, and keep it moving. That's how I look at it. So I'm not expecting the person who's writing the check to tell me where it needs to go—I'm expecting myself to have an answer about where it needs to go, why it needs to go there, and some understanding in my own community about the importance of that redirection or that direction. Because we understand what we've been living through, and we understand what needs to change. Some of us do better than others. Some of us are so accustomed to the system we have in place and figuring out how to navigate around it.

For sure.

Sure. One of the things I wanted to make sure I spent a little time on—or as much as you need—is kind of just as an entrepreneur, as a small business, medium-sized business, regardless of the size: what can you do in this moment that's very important that you should do regularly anyway, but you need to do it now? And that is step back and take a hard look at your business.

Insanity is doing the same thing over and over again and expecting a different result. If you are in a business and you are struggling, be clear about whether the struggle is up a hill and you can see the mountain, or the struggle is up a hill of mud and you are not going to make progress because there is something that is misaligned. You can be in business for yourself and it just be you, you can be in business for yourself and have 20, 30, or a thousand employees—but there's still things you need to do to take a look at your business and do a reset.

I got reacquainted with a concept—and I may be mispronouncing it—it's called Ikigai, a Japanese term, and it talks about the reason for being. What I really love about this concept: if you can visualize this, there are four circles, and I think this applies personally but it's also a recipe for stepping back and re-examining your business and where you are in your business. It's the intersection of four concepts: one is that which you love, the other is that which you are good at, the third is that which the world needs, and the fourth is that which you can be paid for.

And there's an application for this for business, not just personal, because I may love something and I may be good at that thing I love, and there may be people who need it, but if I can't figure out how to get paid for it, it will not sustain itself. I will not be able to sustain it.

So in this moment, maybe there was cash flow before COVID and it's not now. You have to be thoughtful about whether you can get paid for it in the future, and if you can get paid for it doing it the same way you've done it before. The easy example of that is e-commerce—you don't need a store now. Do I need to have a studio where people come in and take this course? So much has changed because of Zoom and other technologies, and these are not examples that apply to everyone's business, but you have to think about the business you're in that way.

Then the other thing that I would say do is think about your core competencies—the things you are very, very good at in your business that maybe you were being paid for. What can that core competency be applied to in this new market, or the way you think things are going to change because of COVID? And you leverage those core competencies into a new or another business that's aligned with this one—meaning aligned in the sense that it relates to it but it may not be exactly the same thing.

Big company example that comes to mind is an organization that used to be in the food distribution business, and they were big on that. The margins on food distribution started to get tighter and tighter and it was hard for them to make money. They bifurcated into medical device and health care product distribution. That company is Cardinal Health, Fortune 50 company. I always remember that example because they took—the world was changing on them. It didn't change on them overnight, they were watching this. You always have to be on the watch for as the world is changing, but more importantly as your customers are changing.

Your customers—who are they? How are they procuring services today? Will they come back tomorrow? And what will they need from you? How are you going to differentiate yourself in order to serve them tomorrow? These are all things that we know in our core. It's now time to take those basics and reapply them, and step back and re-examine to see where you need to reset.

Yeah, this is a way to—just taking it head on.

So all good questions. My answers are: first, I'm not a lawyer, but let me give you my perspective on it, and you can add it to what you've already heard. I have signed many non-disclosure agreements from entrepreneurs who have an idea or a concept and they want to protect it. So an NDA—I'm assuming that's what we mean by this non-disclosure agreement—is quite acceptable. Anyone who's not willing to sign it may not either understand it, so be ready to explain it to them. And if they get insulted by it, it's not your fault. Yes, it's sometimes I will suggest to an entrepreneur that they provide me with a non-disclosure agreement because I just think it's a good tool for them to have in their toolkit anyway.

The other piece—trademark for a parent holding company—I think it is, if you can afford it at that time. Because you know, you never know if your rocket's going to take off and go to the moon or if it's just going to go next door. So if that trademark protects your business from others coming in and using your name and folks thinking they're buying from you and they're not—absolutely. But it is about what you can afford and when you can afford it as you are starting up. So I would put it on the list of things that you're thinking about, and depending on your finances you can decide how soon you go after that trademark. I would say talk to a lawyer because sometimes you can be in business, you can be using the name and maybe not have a trademark, but you still have some—how do I say this—legal hold on that name because you've been using it and for how long you've been using it. This is one where you really want to talk to an attorney.

This is going to sound cute and trite, but if they're not appreciating you at home, go somewhere else. Go to another city, go to another community—and I'm not saying you physically, you can be based here—but you don't have to have all your clients here. I have a number of friends who are entrepreneurs who could not get traction in Columbus, could not get anybody to buy their wares, for whatever reasons—who knows what the underlying reasons are. As soon as they started building relationships in other cities, they were able to sell their business, their products—then suddenly the folks at home started to appreciate them. And the hard part is not to be mad at them because they didn't get you the first time around. Only amateurs stay mad, and you're not an amateur.

I would just kind of weave in a concept from one of our other executives on that same track, which was: this is the time to start working outside of your familiar network. While we have access to Zoom and most people are at home, start thinking outside of the box and find those people that may not be typical or traditional or familiar partners, to make sure that you're making them aware of the good that you do, or your business, or the service that you offer.

Oh gee, always tough—especially going after investors. I mean, this is sell, sell, sell yourself, and you spend so much time doing that you almost don't have time in the business. But that's what it takes. It's back to relationships and cultivating them and moving on in a graceful way if it's not a relationship that's productive—you thought it was going to take you somewhere and it did not. That one is persistence through people and people relationships. Advertising is not the right word I want to use—it's a form of marketing. Marketing self constantly, ad nauseum, not to the point people run away from you when they see you coming.

So this is where you begin with the end in mind—and I know you're already into it. You guys have some what I call top-shelf questions and top-shelf problems to resolve. You control your business. What you have to be able to do is separate your friendship relationships and these decisions from your business decisions, because oftentimes I find these become difficult conversations when someone wants more out of it, they want their name on it, but you started it, it's your baby. How comfortable are you telling your friend or this person who's put money in—may or may not be a friend—that no, but this is what I can do. What you want to do is protect your ability to control the business. And this is where you always also need a good lawyer. You can have majority equity in a business but not have control over it. Someone else can be controlling it. You can separate control from equity—the ownership. I would say sit down with a lawyer and have them talk you through these different aspects.

Because if the person wants more equity, the term—the title, co-founder—I'm not even sure how they get there other than they want to pull their money out, unless they're named co-founder. And that's where you have to identify other investors, because if it's going that well where the person really wants to be a co-founder or else they'll pull their money out, there's probably somebody else out there who will make that same investment in the business if it's that good. Everybody you start off with are not the people you're going to end up with in your business.