It’s not surprising that successful business people often share similar opinions about many things. However, when it comes to keeping up with the news, the business leaders I know seem to gravitate toward one of two recommendations: "Watch the news or read the paper every day" or "Never watch the news or read the paper."
As a young man, I was confounded by this contradiction, but later I came to appreciate the natural symmetry of these opposing viewpoints.
Every day, our world grows larger, more complex and more technologically advanced, so naturally it is important for all of us to stay abreast of the latest developments on Wall Street, on Main Street and of course on Capitol Hill (what street is Capitol Hill on?). Unfortunately, while we may be eager for new information, we are not always adept at filtering through it to obtain the accurate and relevant facts. Every day, we are bombarded with so much negativity that we often begin to feel not only helpless, but hopeless.
The real kicker is that most of the negative events happening in economics, politics, athletics and Hollywood aren’t the complex enigmas that the media makes them out to be. The real news, which shouldn’t come as a surprise to anyone, is that people are just being people, and recently people have made some bad decisions – that is the simple, painfully disappointing truth behind our current economic situation.
Many of the issues facing our economy can, at their fundamental level, be traced back to a few critical mistakes made collectively by companies and consumers alike.
First, people got greedy. Consumers want more and are willing to finance small and large purchases at unfavorable credit terms. Financial institutions add fuel to the fire when they aggressively market these lending vehicles to unqualified debtors. It’s fine to want more out of life or to want your business to grow, but at what cost? Are we willing to risk "losing the war to win the battle?"
Second, people failed to plan and budget. People are emotional by nature, and as such, we tend to react to stimuli. In our personal lives as well as in our businesses, we must learn to temper our instinct to react. We need to have a long-term strategy, a short term operating plan and a budget. Missing any one of these elements exposes us to increased risk and uncertainty.
Third, people failed to monitor performance and take appropriate corrective action. Strategy, planning and budgeting are necessary elements to managing business and personal finances, but we cannot plan for every eventuality. Performance must be tracked and results reviewed on a regular basis. If the current actions are not producing the desired results, then we need to take action to correct the situation.
As we prepare for the warm summer months ahead, here are a few simple steps we can all take to weather these cold economic times:
Stop! Stop reacting to the constant negativity in the media. Businesses can still grow and be profitable even during a recession. Stop worrying about what everyone else is doing especially when it has no direct impact on your business. (Who cares if a CEO takes a private jet to a meeting or a company sends their top performers on a trip to Mexico? How does that impact you?) Just stop.
SURF (Seek and Understand Relevant Facts). Begin filtering through the bad information and hype in order to identify and process the important, relevant and reliable information that will help you make better business decisions. By focusing on the right data and making fundamentally sound decisions you can advance your business momentum. For every business that has resigned itself to being a victim of the recession, there is a competitor who is trying to innovate, become more efficient and capture market share.
Get TAN (Timely Accurate Numbers). Know your P&L, balance sheet and cash flow backwards, forwards, inside out and upside down. If you don’t have the time or don’t understand them, find someone to guide you. Start looking for opportunities to better manage your expenses, but not at the expense of your business – make certain that the cuts you make don’t erode your quality, customer service or capacity to meet your current demand.
Focus on the fundamentals. Take count of your current assets (especially cash) and make smart, non-reactionary decisions about your investments (Rule of thumb = buy low and sell high). Practice prudent expense management and try to ensure that your expenditures result in additional revenue and help you establish a more stable, efficient operating structure. Actively network as much as possible to share ideas, innovate and meet potential customers. Create value for your customers and suppliers, and make contributions in the community where you can.
Align incentives. Take a long-term management perspective. Your business should be a going concern; a good leader will take appropriate action to prosper in the short term, but not at the expense of long-term success. You should never prosper at the expense of your employees, customers, suppliers, or the community as a whole (no matter what state the economy is in). Reward strong performers and work to retain top talent. Create a business environment where win-win situations are the norm.
David Rockefeller said, "Success in business requires training and discipline and hard work. But if you’re not frightened by these things, the opportunities are just as great today as they ever were."
With that in mind, start feeling grateful for this recession. Embrace it. Get excited about it. Stop reacting. Focus on the fundamentals. Take advantage of this opportunity to improve your business and position yourself for long-term growth and profitability.
Timothy Lantz is founder and president, Pantheon Business Council, Cudahy.