The Unbelievably Fun Challenge of the Economic Downturn
November 20, 2008 • Business Growth
It is still 2008, heading into the uncharted waters of 2009, and I am excited!
Ludicrous? Maybe.
Let me give you my rationale for the amazing opportunity for the next season of our economy. I believe that persecution makes you stronger. It causes people to persevere. We have been giving the clues necessary to manage and work through the “crisis” we face.
While CNN spreads fear, we must keep our heads. Is the media wrong to spread fear the way they are doing? Yes and No. Yes, in that the media is responsible with spreading facts of truth, not headlines of legend. No, in that we do need to face reality and the reality doesn’t look good.
Yet, the clues are in the realities and from these realities you can build your counter-offensive. Here are some stated realities:
Higher Unemployment
This is coming in three areas. First, from the actual affected industries and businesses (from real estate to car manufacturers). Second, unemployment is showing up in the first wave of “necessary” layoffs, which is really an excuse to let go of lower performing employees. Finally, unemployment is higher because of companies implementing a hiring freeze, which will keep the unemployment rate higher until there are signs of economic life. This is nothing more than a defensive mechanism to protect their businesses.
High “Credit Crunch”
The credit crunch is real. Banks are being held to higher standards because of the acts of a few, just as corporate America was held to higher standards because of Enron. Banks are simply scared. They are looking out for themselves, knowing they have a bailout to help them clean up their bad debts. The Credit Crunch has caused them to draw new lines in the sand with us. We now have to deal with new terms, shorter and shallower lines of credit and harder restrictions. All of this makes it hard to borrow money and thus harder to do our business as usual. That is the opportunity, though. It is time to change our business as usual and innovate. Build your business around the tough restrictions and when they loosen, you will fly.
Low Consumer Confidence
The great masses of Americans will truly feel the pinch this Christmas and not spend as much as expected. That will affect 4th quarter projections and impact balance sheets and year end numbers dramatically. This will yield to more negative projections and more media negative rhetoric. All this, however, is the sickness working itself out of our system.
Slower Payment Terms:
Every CEO I have talked with has discussed terms of AR/AP. This is a natural process that will affect normal cash flow, positively and negatively. It is what it is. I suggest you create your strategy for your business.
Lower Closing Ratios
It is true that the majority of businesses will need to work twice as hard to close the same amount of sales from years before. However, this is an opportunity for innovation and growth, not fear. I was recently in a forum where one CEO planned to lose 10% this next year. I was amazed. He had already capitulated to the negative rhetoric of recession talk. How does he know he is going to lose 10%? With this language he will most likely be off 20%.
Don’t count yourself out! Work on plans to grow your business, not let it shrink.
There are many more indicators that are true realities of the state of our economy. I suggest you look at the state of your business and build plans to handle the state of the recession. Work those plans diligently and plan to grow as much as possible, and watch others wallow in the misery of self-inflicted negative misery.
Who knows? This just might be the most fun year of your business life.
1 Comment
Ray Griffin said...
Great word for businesses, non-profits, and churches. Negatives are opportunities for retreat or for rolling up the sleeves and pressing into the realities of what must be done. This is the type of time ripe for vision, hope, and courage. Psalm 20:7.
Comment by Ray Griffin - Nov 21, 2008 @ 11:45 AM