Have You heard the one: Why did God create weathermen? To make economists look good. What about this one: If all the economists in the world were laid end to end, it wouldn't be a bad thing.
Economists tend to get a bad wrap because forecasting the economy and business is an art, not a science. Economic outcomes are influenced by unanticipated events, inadequate data, and people's behavior.
Behavior is motivated by such things as feelings, attitudes, and perceptions. These are impacted by self-fulfilling prophecies. People change their behavior to agree with a prediction.
I know of a wholesale specialty foods distributor that had been doing well. Nevertheless, after continuing to read and hear news about bleak economic reports, declines in consumer spending, and so forth, the managers cut back on the company's business activities.
Their actions caused the company's business to drop off, negatively impacting the nation's economy, helping create what the managers expected.
Despite its inexactness, numerous managers continue to rely heavily on economic conjectures as the basis for many of the decisions that determine their company's future.
Thankfully, the outlook of economists is that the second half of this year will see an increase in business. As word of this prediction spreads, the business cycle should pick up as managers act accordingly, increasing their business activities.
But, keep in mind the words of my father, a veteran of sales and marketing, who observed: “Even the best economic forecast is always just one big unexpected event away from the trashcan.” Take any forecast with a large grain of salt.
It's my contention that the only way to predict the future is to have the power to shape it.
All businesses are affected by the same influences. Yet within our industry, some are prospering, some are enduring, and some have ceased operations.
Why is this? Do some companies possess secrets to success or business magic? Do they simply enjoy good fortune and luck?
No. Businesses doing well share an underlying principle of business survival and success, succinctly stated by Bette Davis: “There's only one way to work — like hell.”
These companies have mastered what it takes to succeed, regardless of economic climate. They understand full well that there are no “bad times,” only periods that require extra effort.
When business gets slow, like it has been, there are two ways to react. One way is to cut costs to the bone and wait it out. The other way is to do something about it.
Cutting costs is always worthwhile.
When business is good, there's a tendency to overlook many small expenses which, in aggregate, amount to a large sum.
When business gets slow, these small expenses can determine the difference between a profitable year and one that ends with a loss.
Costs should always be monitored, regardless of the business climate.
When business is slow, there is also a tendency to accept it and to commiserate with cohorts on how bad things are.
A better reaction is to attack the situation by aggressively seeking out ways to better serve your customers and to acquire new business.
Even when business is slow, somebody is buying something.
There is always business to be had and money to be made. But you have to want to have it, and you have to work at making it happen.
Work hard and you chain the wheel of chance.
I welcome your thoughts and comments.