Walter Isenberg | Crain's Philadelphia

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Walter Isenberg

Background:  

Based in Denver, Sage Hospitality owns and operates hotels in 26 states. It also owns and operates 11 restaurant concepts through the Sage Restaurant Group.

The Mistake:

I wasn’t prepared for the worst.

A lot of people in business think that if you work hard and do the right things, everything will go all right. But there are situations that can come up, things I like to call “unknown unknowns,” that can threaten your business no matter how well-prepared you are.

If you take 9/11 as a big example. The event itself was horrific in terms of humanity. From our business’ perspective, we were deeply affected by the event’s impact on the air travel industry, and we weren’t prepared at all.

At the time, we didn’t know when or if people would ever get on airplanes again. If you remember, all air transportation ceased in the wake of the attacks. Even after it was reinstated, we weren’t sure if people would ever get back on airplanes, and if they did, whether it would be at the same frequency. Those were all-consuming fears.

We weren’t prepared from a systems perspective. It wasn’t like our cash management systems weren’t good and it wasn’t like our level of oversight wasn’t good. They just weren’t good enough to deal with that level of stress to the business.

I think it was so hard because it was completely outside our control. The attacks themselves, of course, were outside our control. The federal government’s response and the response of travel companies were also outside of our control. We didn’t know how long we would have to hang on or if there was even anything left to hang on to.

There are situations that can ... threaten your business no matter how well-prepared you are.

The Lesson:

If you have great leaders in place, making the best decisions they can in situations they may not be prepared for, that’s the most you can hope for.

As an organization, Sage learned a lot from what happened to us after 9/11, and we are better as a result. I’m not sure we could have done anything differently, but we have since increased cash reserves, which could help us weather something like this if it happens again.

It’s a balancing act at its core. You have to balance this desire to be protected with an aversion to being too conservative. It’s not an exact science, certainly.

We forecast in 2007 that a downturn was coming. There were some early signs. What we didn’t see coming was the biggest downturn in revenue-per-available-room the hospitality industry had seen since the Great Depression. Fortunately, we had great partners and a strong balance sheet.

Until you’ve been through something like the downturn of 2008 or 9/11, I think it’s difficult to know how it feels. But that’s part of business; you go through different experiences and you learn from them. There’s no business I know that is immune to challenges. The best companies doing the best strategic thinking still have challenges come at them that are outside their control.

You can follow Walter Isenberg on Twitter at @sagewisenberg.

Photo courtesy of Sage Hospitality.

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