There’s good news and bad news.
First, the bad news. We are headed for a recession. I posted a warning about this months ago. Actually, we’re in it. Review the Christmas sales that left retailers in a panic. I believe this recession will be deeper and more painful than the “experts” are telling us.
I also believe moves by the Fed will hurt more than help. Further interest rate cuts will hurt the dollar. Japan floundered with interest rates at near zero for years and it didn’t help their economy. As the Fed cuts rates, money will move to gold. That will hurt investment in business. Cutting interest rates decreases the attractiveness of treasuries. The government will suck up cash. Consumer spending will slow. Watch car sales. When cars start selling again, we’ll be coming out of it. I see a sharp, deep trough with a relatively quick recovery bouyed by the elections in November and then another drop for a longer period of time but not as servere and the hit we’ll take in ’08.
Now the good news. Assuming I’m writing for the smarter business crowd, many of your competitors will go out of business. The weak dollar is going drive up the price of imported goods. High oil prices will make bringing the goods to the shelves more expensive. Many of your competitors will try to buy their way out of a sales decline with advertisting and price cuts. That will kill them.
You, on the other hand, will immediately get to work to improve your customer service. The cost of doing that is nothing compared to the billions of dollars your competition will waste on advertising that does not work.
You will get smart about “new” marketing. It’s really free advertising and it does work. The results are immediate so you had better start now. The new marketing revolves around the power of communication. The consumer has the edge. He can Google your company and instantly see hundreds of reviews of your business. Will they be good reviews?
The smart companies will develop talent. This takes some practice and a change in corporate culture.
Henry Knox ran a bookstore. He was self-educated. He was 26 years old and had no military or leadership experience when he met George Washington. At the siege of Boston, Knox proposed going up to Fort Ticonderoga and bringing back the canons abandoned by the British. That was 300 mile trip. It was winter. The canons each weighed over a ton. It was considered an impossibility. Washington gave his O.K. and 56 days later, Knox returned with the canons. The canons changed the outcome of the sige of Boston.
Today, Ft. Knox is where we keep the gold. The smart businesses will listen to new ideas and let people carry them out. That’s where the gold is.
Chris Reich, Author of TeachU’s Business Talk Blog