Strategic Thinking: Look ahead

Vistage economist and business expert Alan Beaulieu of the Institute of Trend Research is generally given credit for accurately predicting when this recession began (the end of 2007), and now predicts that a recovery will be under way by March 2010.

Business owners, he claims, may fail to recognize the early signs of the recovery next year because it won’t directly affect them until mid- to late summer 2010. Your competitive advantage will be to see the recovery early enough to take advantage of its opportunities as a first responder.

Here’s a summary of Beaulieu’s projections:

  • Early recovery: March 2010.
  • U.S. housing market will continue to decline until late 2009 or early 2010. Prices will stay flat until 2011.
  • No inflation by historical standards until 2011-2012.
  • Unemployment will peak in early 2010 at 9 to 10 percent.
  • Credit conditions will improve a bit in 2010.
  • The dollar will remain stable against other currencies through the end of this year.

How to survive and thrive

Beaulieu has eight very specific suggestions for business owners during this period:

  1. The middle of 2010 will be a great time to expand your business, taking advantage of cheap prices for new and used equipment, re-negotiated leases, long-term contracts and real estate, and low interest rates.
  2. The best year for borrowing will be 2010.
  3. Pick up hiring practices now to take advantage of talent that will go off the market later in 2010.
  4. Eliminate products and services that are drags on gross margins.
  5. Focus on markets that are resilient: alternative energy, “green,” hotel-motel, water, health care, funeral services, alcohol, security, legal services, food distribution, water purification/distribution, education (community colleges), pet products, and leisure.
  6. Find ways to market your products in western Canada, Brazil, and Australia–not Russia and China, which are not positioned for short-term growth.
  7. On the soft side of management:  lead with confidence and courage and take warranted risks. Celebrate victories, no matter how small. Show optimism, be clear about your company’s future circa 2011.
  8. Remember that “cash is king” and 12/12 trending of your revenues is paramount.

Document what’s happening

One approach that several TEC members have used is to document, in a diary, highlights of each week’s national economic news. As we all know, those highlights are typically negative and involve falling markets, bank failures, massive layoffs, new bailouts, rising unemployment and foreclosures. What did I leave out?

Within your own business, there’s generally offsetting good news such as a new customer, new customer commitment, a new product, new market penetration, and so on. Contrasting the gloomy media reports with these very positive business happenings is a stress reducer for the company. And believe it or not, the CEO actually feels better about it, too.

I can vividly recall chairing a Madison TEC meeting in August 1974. President Nixon was in the process of announcing wage/price controls, and a member brought a small TV into the room to hear his speech. It was frightening, and several thought this might be the end of the world.

By the end of the year, the dust had pretty much settled from Nixon’s announcement. Selective price increases were in the works, union contracts had been renegotiated or suspended, and small and medium-sized businesses recovered and went on with business.

That recession was always compared with the Great Depression, just like this one is being compared now. What is never taken into full account is the ingenuity and perserverance of small business to find a way to survive and grow stronger through it all.

So far, among our 650 TEC companies and 250 Executive Agenda businesses, we’re seeing very few instances signaling defeat. Sure, that will inevitably happen to some. But the feedback we’re getting is that most of these businesses, from all key sectors, have prepared themselves well for the warnings that Brian Beaulieu and his colleagues are projecting for the next couple of years.

Until next month, may your diary overflow with rich examples of your success during this “great” recession with a capital “R.” 

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