This recession, like pretty much every recession before it, has its genesis in some event or government policy that went financially wrong. People got burned and suddenly the market went crash and people started losing their jobs. This one can be traced back to when the government deregulated the banking industry and allowed the banks to give mortgages and lines of credit to just about anyone. A few years later everyone learned how bad of an idea that was when millions of people started losing their homes on a monthly basis.
Now the government is in damage control mode and out comes this bailout to the banking industry. That was such a horrible idea that they decided to do one for the automakers as well. The new incoming president Obama wants even more money but at least he has a detailed plan for it and can tell us exactly where it will go and it looks like none of it is bailing out any industries. Obama wants to create jobs by taking $850 Billion and giving us tax breaks and repairing and updating the country’s infrastructure. He wants to repair and build roads, fix education, and start fixing our power infrastructure that is badly in need of help. I can get behind that. He will create millions of jobs with that. But in the end it may not be enough because an extended recession is all a state of mind.
I called on a customer last week who told me to call him back in April, if he was still there to answer the phone he would buy from me. I asked him what was going on and he said his company is laying of 5,000 people in January and February. I told him I was sorry to hear that his company was losing so much money. He said that they were not losing money yet and that these were all preventive measures because of the fear of losing money. This company will ruin the lives of 5,000 families all because they are unsure of where the economy is going. This sort of activity by corporate America, ladies and gentlemen, is what ultimately causes the economy to stay down in a time of recession.
Companies that cut back in anticipation of tough times either disappear or take twice as long to recover from a recession as the companies that kept on with business as usual and found new ways to generate revenue. I know of several large companies that are growing, hiring employees, and giving their existing employees raises and bonuses. These are the companies that will emerge as dominant leaders in 12 to 18 months when this is finally over.
Business is a funny thing but when you don’t get the joke it can become a nightmare. Holding back in these bad times means that you are one of the competitors that the future business giants are currently stepping over to become leaders when the recession ends. When you pull back and wait you are exhibiting weakness and weakness in business is fatal. When you pull back in a recession you are letting the real business people pass you by.
So to all of the companies laying off workers in anticipation of bad times I say goodbye. The bad times you fear are on their way and you have no one to blame but yourself. Layoffs, cutting budgets, and cutting back in sales and marketing activity is a sign of bad management and also a sign that you may have allowed your company to grow too big in the first place. After the first 6 to 9 months recession becomes a state of mind. As a business owner it is up to you to decide what state you want to live in.
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