A Different Approach to a Challenging Economy

History repeats itself. It always does. Ever heard of Blacks Monday (October 28,1929 and 19,1987), Tuesday (October 29, 1929), or Thursday (October 24, 1929)? The Mini-Crash (October 27,1997)? In history, there are several other examples of the typical turmoil that is October in our markets. I’m not attempting to discount what is happening now. Several things have converged at the same time to cause a correction. Most market experts believe we will experience unrest for a while, and the days of “easy money” via easy credit are likely behind us. Markets are sometimes volatile. They just are. As small business people, we usually suffer the most during stressful economic times. Here are some tips to weather the storm that you’re not likely to see on TV or read in the newspaper. Have a POSITIVE attitude. I repeat, have a POSITIVE attitude. Business may be down for just about everyone, but business still exists to be captured. Those who proactively and positively go after new business, in spite of the economy, are likely to get more new business. A negative focus usually leads to negative behaviors that aren’t likely to bring in new business. Celebrate every new piece of business you win right now. Making a bigger deal of it than you normally would will lead to more POSITIVE thinking, a boost in morale around the workplace, and a likely snowball effect. Avoid reactive expense trimming. Cutting expenses right now without clearly evaluating which expenses are truly investments in business growth and success will guarantee revenue contraction. Take a more strategic approach. Determine which expenditures have truly paid off with increased business in the past. (If you can’t obtain from your data, you need POSITUS.) Cut expenses that are either not necessary or provide no return. Devote some of the savings to an increase in those expenditures that have led to solid business growth. Listen to your customers and provide them with creative alternatives. When the economy is great, most business people continue to do what they’ve always done. Now is the time to prove your business’ value by offering a more flexible product or service mix to existing customers, while showing how your business is different to potential new ones. Use this time to break bad business habits. When times are good, we can all afford to throw some money away, waste some time, or do things inefficiently. Focus on correcting one bad business habit, and keep it at bay when things turn back up. Consider accelerating a portion of your retirement contribution for 2008 now. Actually, Warren Buffett recommended this one, and I’m pilfering it. Your investment advisor can help you determine how much is reasonable to invest in the market right now to take advantage of the long-term growth that corrections historically bring to the market. Remember, history repeats itself. Taking a positive, pro-active approach to this downturn will make both you and your business better prepared for the next one.