survive an economic soft landing
HARRY S. DENNIS III
For SBT
To be honest, I didn’t want to write on this subject this month. Burying my head in the proverbial sand seemed like a good alternative. But that won’t work, so here goes.
We sent out surveys to 540 of our TEC members in Wisconsin and Michigan in early January, and we tabulated and returned their replies within two weeks. Who is represented in these surveys? You name it: heavy and light construction, commercial real estate, heavy and light manufacturing, advertising, financial services, industrial distribution, automotive at the retail and industrial level, and so on. A true cross-section of businesses in our two states. What did they say?
In response to the question, "Is the US economy in a recession?" 35% said yes, 30% said no, and 35% were not sure. Regarding their particular industries, it is interesting that 50% said "No, we are not in a recession."
We asked how our TEC members felt their businesses would perform this year compared to last year. Again some unexpected results: 55% said their sales would be better and 50% said their profits would be better than the former year. Only 16% and 22% said their sales and profits would be worse, respectively.
Regarding the stock market, 90% see a market that is mixed with continued volatility.
Prices? Always a big question. The average reported increase is 4.5%. If you are into stats, the median and mode were 3%. Of those who are thinking about decreasing prices, only a few – about 3% – are going to go south.
Salary & wages for 2001? All the stats were fairly uniform: salary increases around 4% and hourly increases at 3%. A number of respondents reported that due to an expected lower business climate this year, their salary and wage increases would by necessity be lower. They want to give more, in other words, but the reality of business conditions and expectations results in the conservative increases reported here.
What’s happening with the Internet? Surprisingly, 50% of our TEC members responding said they use the ‘net to purchase on average 9% of their material or procurement needs (as a percent of total purchases), or both. More surprisingly, while 41% of our TEC sample said they use the Internet to sell their products and services, the average percent of total sales reported was 8%. The median and mode was 5%.
There you have it. I wish to be the contrarian for a moment. So bear with me. Yes, the economy has slowed. Yes, we need to retrench, to a degree. But based upon our survey of TEC members, the future is not black at all.
Attitude. What’s your attitude going into this period of temporary uncertainty? Are you regressive or progressive? I hope you are the latter. Here are a few steps:
1. Get control of your cash.
2. Don’t enter into any contracts that will tie you up.
3. Reassure your employees.
4. Take a personal sacrifice if needed for the business.
5. Get very close to your customers.
6. Negotiate improved terms with vendors.
7. Cut costs – the stuff you don’t need – now.
8. Strengthen your selling effort bigtime.
9. Make sure you have a handle on the crux of your business.
10. Beat your competition.
So there you have it. Nothing magic. Just common sense. I have been through five recessions since I became involved with TEC back in 1973. None have been easy, to be sure. But guess what? We all prevailed and I believe we will this time around, too. The best advice I can offer to a business owner reading this is to hang tough. Don’t get discouraged. You will come back. Patience, patience, patience. Until next month, keep your old "dopper" up.
Harry S. Dennis III is the president of TEC (The Executive Committee) in Wisconsin and Michigan. TEC is a professional development group for CEOs, presidents and business owners. He can be reached at 262-821-3340.
