By Michael Gunther
Another new year is upon us and hopefully you’ve survived the storm called the “Great Recession.” I’d imagine if you’re like most business owners, your perspective and attitude has now shifted to address the aftermath. Although the storm has passed, we’re left with some new realities and lingering issues that will continue to impact businesses in the coming years.
- Credit is going to continue to be tight in the foreseeable future. With foreclosures still growing as well as personal and business bankruptcies increasing, you can expect the banks to maintain tough lending standards. In reality, these standards may prevent another melt down from reoccurring in the long term, but they may also constrict growth of healthy, small businesses. At some point the pendulum will have to swing back to the middle.
- The housing market is still unstable, with foreclosures increasing and housing prices in the 20 major markets decreasing. This is good for first time home buyers, but doesn’t bode well for individuals who are upside down with their mortgages. This trend has a tendency to lead to more foreclosures which then puts pressure on the rest of the business sectors.
- Unemployment remains at high levels, and may even slightly grow. The current numbers are a little misleading. They don’t include the underemployed (individuals working part time or in jobs under their typical pay level) or the unemployed who are no longer receiving unemployment benefits (as they’re considered to be no longer seeking jobs). If these two groups were included, unemployment sits somewhere between 17-18%. The economy we’re operating within today is the new ‘norm.’ Economists predict a 3-4% growth rate this year, yet, we need a growth rate of at least 5% to begin to make a dent in the unemployment numbers.
- More reductions in government and increasing taxes. Almost every government entity (Federal, state and local) is dealing with unprecedented revenue declines, increased borrowing and increasing costs. Where private industries are quick to react to economic conditions, the government tends to lag. I anticipate we’ll see an impact of these choices by our government leaders in the form of increased taxes, decreased services, increased interest rates and employee layoffs, none of which will help a struggling economy.
I highlighted these issues not to discourage you, but to reinforce the current ‘norm’ in which we have to operate our businesses. Unlike past recessions that were short lived, the impact of this “Great Recession” is going to last for many more years. Rather than being discouraged, we should view this as an opportunity to build a solid foundation for growth.
In fact, this last year I met as many business owners who were struggling as I did who were seeing significant growth. So, what’s the difference?
A proactive attitude, perseverance of action and a realization that they can only control those things within their sphere of influence. They’re not hoping or wishing things will get better; they’re taking direct, focused action to deal with the issues within their businesses and their marketplaces. They’re making the tough decisions, but also leading their teams with a strong purpose and direction for the future.
I remember growing up in the recession of the 70’s which then turned into hyperinflation. My parents had to make some difficult decisions based on their financial situation and my dad’s union going on strike. They pulled us all out of private catholic schools and put us into public schools. They cut back on clothing and food budgets (I remember eating a lot of noodle casseroles—a little bag of pasta and a pound of meat can go a long way). We all had to work to generate our own funds for extra-curricular activities. We participated in more family games and picnics for entertainment, which actually brought us closer together.
What stands out in my memory is that they never sweated the details (at least from our perspective). They led the way by making tough decisions and keeping positive attitudes, regardless of our situation. They always had faith that no matter what, they would make things work and keep us all happy and healthy.
The Bottom Line
As a leader, you have a choice every day on how to approach your business in the aftermath of this storm called the “Great Recession.” Those who will not only survive but thrive will be the leaders who remember that their job is to LEAD the way and provide the attitude and perseverance to which others will gravitate towards and put their energy behind.