We are unquestionably now besieged by a business slowdown, whether a technical recession or not is yet to be determined. Slowdowns are an inevitable part of the free enterprise system and are to be expected and endured. In fact, they come in handy if understood and manipulated to advantage.
How can a recession ever be used to advantage? To address that question I must beg your indulgence whilst I butcher a famous quote that I can’t seem to locate and must, of necessity, paraphrase from memory. During a battle between the British army and Napoleon’s army, a courier reported to the British general (or, French general) that their plight was hopeless. It seems that their lines were disintegrating at every point of contact and defeat was imminent. In response to the situation, the British general exclaimed, “Excellent, now I can attack!”
Recessions have occurred with regularity during our history. Some are minor while some have risen to the level of depression, most notably during the 1930’s. Our last recession occurred during the early 90’s and is credited with causing the ouster of the first President George Bush and the election of Bill Clinton. Many business watchers were surprised that the “roaring 1990’s” proceeded unimpaired by a significant business slowdown. In fact, some youngsters even believed that the advent of technology had made recessions antiquated and there would be no more. Obviously, there are some things that even technology cannot change and periodic economic corrections, i.e. recessions, are one of those things.
Pay very close attention and I will tell you how to use the current slowdown to advantage. Since recessions occur from time to time we know that all periods of robust business activity will ultimately dip into a slowdown. The problem is that we don’t know when the dip will occur.
Launching a new business venture, strategy, product or service is a risky undertaking under the best of circumstances. The likelihood of success for a new deal is diminished significantly should the robust economy dip into recession shortly after the new deal is launched.
Therefore, the trick is to launch the new deal while the economy is robust and will stay robust for long enough to let the new deal take hold enough to weather the storm of recession. How can you predict the business cycle with sufficient accuracy to know that you will have sufficient time to get the new deal in motion and on firm footing before another recession begins?
The answer is really quite simple. Once we are in recession, the next phase of the business cycle will be an upswing. We know that recessions typically last from 12 months to two years. The current slowdown is about a year old and will likely by phasing out next summer. Start your new deal sometime in the first half of 2002 and you can be fairly confident that you have a full robust business cycle to operate in before the winds of recession begin to blow again.
I am obliged to point out that nothing is absolutely certain and predictable in business. It is, of course, possible that this recession will last for 10 years or 50 years. History does not indicate that to be likely, however there is always the risk of things not going according to plan. It is a given that business itself is risky and is not the place for the fainthearted. Those unwilling to accept any risk should leave the dance floor and sit on the sidelines.
Therefore, in the immortal words of the British general, now is the time to attack. Use this slow time to formulate plans, strategies and new directions for your business. Arrange resources so that when the action begins you will be prepared to play ball.
Thought for the Moment — Courage is contagious. When a brave man takes a stand, the spines of others are often stiffened.
— Billy Graham
Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at email@example.com.