Planning for the Coming Boom
By Patrick Astre
And the darkest hour,
Is just before dawn.
-Dedicated to the One I love – A 60s song by The Mamas & the Papas
that way sometimes, doesn’t it? That the darkness of an economic
slowdown will never end until it swallows your business like a
pelican gulping down a fish. Well relax, that’s not the way it is.
Good times follow tough times – it’s inevitable. They call it the
economic cycle, and it’s been around since people started measuring
such things. It’s just as important for a business owner to plan
for the coming boom, as it was for them to prepare for the
recession. But when do you start? How does one know it’s really
are no clear, defining lines from recession to boom. It isn’t like
throwing on a light switch in a room. It’s more of a slow, gradual
dawn lighting up the eastern sky, taking its time to arrive. We
want to find trends, not sudden eruptions from good to bad…we want
to go from bad to just a little less bad.
different this time: Sure it is, and the check’s in the mail
and you’re my one and only. Don’t believe what you hear from the
economic pundits. Economics was invented to make astrology look
good. In the late 50s and early 60s we had an economic boom partly
based on new technologies like transistors. The “nifty fifty”
stocks reigned supreme and surely it was different this time. Then
along came the early 70s and the Arab oil embargo. We were going to
run out of oil in eight years, they said … it was different this
time. Then we had the inflation and high interest rates of the late
80s, stock market crash of 1987, the 90s Internet boom, technology
meltdown of 2000 followed by 9/11 and now the sub-prime crisis.
Every downturn was followed by an economic boom and vice versa.
It’s never “different this time” and this is no exception. So let’s
start planning for the inevitable resurgence of economic growth with
we at bottom?
business steps should we take if we are entering a recovery period?
let’s look at the first one: Are we at the bottom? To answer that
question we must first realize that it’s a regional game more than a
national one. Las Vegas may be in a boom while New York is in
recession. As of this writing, home prices, which are one economic
indicator, reflects this regional disparity. US News and World
Report states in their June 3, 2008 edition that home prices are
UP 11.8 percent in Mobile Alabama and 6.7 percent in
Jacksonville, Florida from a year ago. During that same period, the
Washington Business Journal’s May 27, 2008 edition states the
Standard & Poors/Case-Shiller Home price Index fell nationally by
figure out if we’re in a less-bad period, (no one can find the
actual, exact bottom) look locally for the signs:
A surge in
residential home sales, or at least a drop in the length of
time homes stay on the market. Best bet: Speak to local
Increase in new
construction means builders are experiencing a demand that
will have ripple effect on the local economy (think appliances,
local building materials outlets, etc…)
Decrease in vacant
commercial properties and increase in commercial
from local banks
Lower interest rates
for mortgages and consumer credit
“help wanted” ads
these signs, and more, indicate improving economic conditions
locally, in your area of business, which is what matters most to you
as the business owner. Once you see these positive signs, it’s time
to analyze your business for the right course to take.
Examine how your business did previously in times like these:
You should be using a computerized accounting system.
Quickbooks is the premier one right now. If you’re using an old
paper system and doing your own bookkeeping, your first task is to
you’re in a new business, this will not apply, but if you’ve been in
business a while here’s what to do:
the report section of Quickbooks (or the equivalent section if you
use a different system.) Examine two sections for a similar period
Sales by item
summary. This will tell you what sold best for the
equivalent recovery last time. Similar items will usually do
Income by customer
summary. Who’s buying your product and services during a
recovery? Is it mainly commercial clients, individuals, young,
old, blue collar, professionals? This is crucial so you can
target your marketing toward those clients.
apply the particular and unique aspect of your business to this
information. Factor in changes to your market since the last boom
changed? Don’t stock up on VCRs when DVDs are the rage.
The pace of technological change can be daunting sometimes. Be
sure you’re not caught using outdated technology in booming
demographics of your market changed? Do you have younger
buyers instead of older ones, families instead of singles,
industrial/commercial as opposed to individuals? Such changes
in your market will require different sales strategies, pricing,
competition like now? At the risk of sounding ghoulish,
look around for competing business that didn’t survive the
recession. Move aggressively to grab the market shares of
moribund competitors. Likewise, be aware of aggressive
competition and match them blow-for-blow.
What are the factors
unique to your industry? Some industries thrive in
recession and don’t do as well in recoveries. Look to the
unique aspects of your industry.
Loosen the purse
strings a tad. Now’s the time to increase
advertising and marketing, add to inventories, hire sales
people. Be cautious, but move forward.
you have it, the basic steps to take advantage of the coming
economic expansion. And remember, when things are looking super
good and it seems like this boom will never end … that will be the
time to prepare for the next recession.
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