Cycles

“Every good thing comes to some kind of end, and then the really good things come to a beginning again.” ― Cory Doctorow, Journalist, Author

According to the good folks at International Trends Research, (www.itreconomics.com/) one of the best companies at forecasting the business climate over two to three year timespans, the U.S. economy is likely to begin to slow it’s overall rate of growth with some industries even dipping into a recession beginning later this year and lasting well into 2019.

Current economic expansion started in June of 2009. That means we’ve been in an expansion mode for nine years now, nearing a US record. During that time many businesses have seen strong growth that’s been reflected in low unemployment numbers, solid company profits and a strong stock market. However as we all know, nothing lasts forever with business cycles being no exception. The question is how do you plan to prepare for it?

It’s easy to get a little lazy when times are good both functionally in our business and mentally. After a long period of stable growth it can be a shock to our system when the numbers don’t begin to match the goals we set.

If we manage our businesses day-to-day, a slowing economy can appear to come out of nowhere. All of a sudden our revenues and cash flow are taking a hit. Customers aren’t as numerous, account receivables begin to go up as clients push out their payments as their income begins to slow. If not prepared for it we can easily find ourselves in a negative state of mind to say nothing of a precarious business situation. Nothing good comes from our thinking when we find ourselves in a constant state of worry. Being angry and frustrated at our situation does nothing to help us through a business slow down.

The old adage, “Attitude is everything.” really applies here. If we believe the predictions of a slowing economy how do we take advantage of it rather than be its slave?

Companies with great leadership prepare ahead of time. If revenue does this, we do X. If it goes to here we take actions Y and Z. By preparing in advance you take a lot of the emotion out of the decisions if and when your business does slow down. Waiting aimlessly until a slow down or recession is right on top of us causes all sorts of emotions to take over. Research shows conclusively that our ability to think clearly let alone creatively declines at a radical rate when trying to make decisions under stress and tension. Our body actually slows the amount of blood running to the logical part of our brain when we’re under self-imposed stress. Doesn’t sound like a solid strategy for making good decisions does it?

How often do we catch ourselves exhibiting frustration over things of which we have no control? If we look at a slowing economy as something to be taken advantage of instead of something to fear all sorts of positive opportunities begin to appear.

A slowing economy forces us to look hard at our business as a whole. Products and services we’ve kept around when times were good even though they weren’t making the margins we needed can be trimmed. If we’ve put away some of our profits we may have the opportunity to buy competitors that didn’t plan as well and for valuations you’d never come close to in a strong economy. Great employees you couldn’t find during good times become available. Lease rates can often be renegotiated or found elsewhere at lower costs. Building that new building you need can often be done at much lower prices than during times of expansion. New products and services can be created based on your customers changing needs.

These are just a few of the many ways you can take advantage of slower economic times. I’m sure if you make time for it you can come up with many others.

The nice thing about cycles,,, they’re cyclical. I know, genius right! What goes down does go back up again. If you go into the next downturn with a positive attitude and a solid plan you lay the foundation for a better, stronger and faster growing company than you’ve ever had before when the cycle ultimately turns up again.