What should you be doing during a recession?

The answer is mostly the same things when the economy is not in a recession – taking care of basics first. These things include:
• Interview perspective employees regularly and don’t try and hide it. Regular interviewing has a lot of advantages. It keeps your interviewing skills sharp and provides you with a lot of recent resumes should you need someone in a hurry. It also puts your staff on notice that they are not indispensible.
• Adjust your marketing plans to be in-line with expected sales. Spending more on advertising when people aren’t hitting the doors might seem like the right thing, but in my experience, if the public isn’t ready to buy, they won’t. Conversely, spending nothing is probably not a wise idea either. The few people that are spending need to know that you are still in business. I believe that the better plan is to spend no more and no less than what you normally would as a percentage of the sales that you can expect.
• Treat your customers better than ever. They are always valuable, but today more than ever.
• Keep your premises looking clean, neat and the shelves stocked. You need to always appear to be ready to do business even if the number of people coming through the doors is down.
• Evaluate one of your major business processes each week. Operating on a reduced staff as many businesses are today puts your staff under a considerable amount of stress. Stress that will eventually affect your customers. This can be reduced by reviewing and eliminating things that people do that are no longer as important as they once might have been.

As the leader of your business, it’s always your job to be looking ahead and only thing that I know for certain in these uncertain times is that this recession, like all the others before it, will eventually pass into history.

Book Review – The Great Depression Ahead by Harry S. Dent, Jr.

If you really want to get depressed, this is the book for you. I bought two copies of this new release, one for me and another for a client. However, I haven’t yet sent the client, a retailer, his copy because I was afraid he had enough problems with the current economy that adding Mr. Dent’s predictions of the future might be too much. Sooner or later I will have to deliver it because I suspect Mr. Dent is more right than he is wrong.

Predicting the future is extremely problematic as any historian will tell you. We only have the current trend lines to work with in an increasing interdependent and complex world that will undoubtedly produce unpredictable changes in those trend lines. People who read Thomas Malthus’ An Essay of the Principle of Population also had good reasons to believe that his predictions of population growth vs. food production would most certainly lead to mass starvation. Nobody of that time period could have foreseen the benefits that technology would eventually produce in the efficiency of production. Nor, could they have foreseen the decline in population growth rates by modern industrial societies. It turns out that the desire to have a lot of kids was mostly driven by potential economic benefits rather than some natural desire to produce as many copies of your genes as possible. That said, I think Mr. Dent’s approach to prediction is much more solid than those of all the experts that the cable news people constantly parade in front of us.

I have read Mr. Dent’s previous two books predicting great time from the 80’s onward. He was certainly right for the most part. He has also made some fairly large flubs including the prediction that the Dow would reach 40,000. This miss must have stung, because I have seen several explanations from him regarding how he was right except for things like dollar demand, etc. The current recession was not predicted in his earlier books which is understandable since the root cause of this downturn appears to be systemic rather than demographic driven. However, it is apparent that this recession is going to be longer than most which might be the result of it running into the demographic slow down in spending that Mr. Dent did predict.

I highly recommend that every business owner read this book. Demographics is probably the best explanation for a good part of why you have a series of good years and then a demand drop off when you are essentially doing the same thing for the whole period. The net gain or loss of population fitting your customer profiles might be the best predictor of the future for your business. I would net bet the farm on his predictions, but I would certainly consider them as possibilities.