Stop Trying to Recover From the Past and Start Building for the Future
Recently I was in a meeting with a customer who had been hit hard by the past recession, and they were struggling to find their bearings. Business was sluggish, the banks were not supportive, and employee morale was at an all-time low. Their last major project had been a bust, and so they called a meeting of all relevant parties in an attempt to figure out what went wrong.Perhaps you have been in a similar type of a meeting.
I do not have any hard data to support this claim, but my gut tells me that meetings such as this one are occurring at an increasing rate right about now. The very severe recession of 2009 is still fresh in our collective consciousness, and the momentum of the nascent recovery is noticeably slower than it was in the first half of this year. And though the current period of sluggish growth was widely expected, now that it is upon us there is growing fear that it could quickly slip into another round of recession.
It sounds a bit overdramatic, but I am nonetheless reminded of how Thomas Paine aptly put it during a bleak period of the Revolutionary War, “These are the times that try men’s souls.” He was trying to spur men to take bold action instead of a wait-and-see approach. There is plenty of data that corroborates this “wait and see” attitude. In the employment data, the number of people filing for unemployment insurance claims has stabilized in a steady and narrow range, but the number of new jobs created has increased very modestly. This reticence to hire new workers is occurring despite the fact that corporate profits are strong, margins are robust, and the total amount of cash on corporate balance sheets is as high as it was at any time prior to the recession. On the whole, big companies have money to spend, but they are choosing not to do so at the present time.
Consumers are also choosing to save more or pay down credit balances rather than increase their spending. Household wealth levels are still much lower than they were before the recession, but wage and income growth has been faster than spending growth for the past several months and consumer confidence levels have risen very slowly off of the bottoms posted last year. And just in case you do not have access to the Internet or cable news channels, we are still fighting a long-running war, struggling with a massive oil spill, and suffering from mushrooming government deficits. And to make matters worse, Europe probably is going back into recession, and in the U.S. we will soon have to endure what promises to be a bitter election season this fall.
So what pearls of wisdom are to be gleaned from this history and business psychology lesson? We caused this problem and it is up to us to fix it. Periods of expansion follow periods of contraction. The needs of the marketplace are bigger than ever. Build inventories and encourage your suppliers to do the same. Add salespeople and implement training programs. Introduce new product lines. Get quotes for new equipment and diligently analyze the needs, costs and payback times for expanding your capacity. Turn off the news channel. Get out of the meeting room. Start helping your customers and building for the future. Now is the time.