The Heart Of Business

By Craig S. Galati

Everywhere I go they say it. Everything I read says it. Seems the “R” word is on everyone’s mind. Although many people believe we are either in or heading into a recession, there are also many people who view these economic times as a market correction which will turn around soon.

We have reached a critical time, one in which we can either talk ourselves into or out of a recession. I know many businesses are feeling the pinch, especially those with ties to real estate, land development, or mortgage banking. And for them, this is already very real.

The American Oxford Dictionary defines a recession as:

“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in the GDP two successive quarters (emphasis added).”

In other words, when consumers reduce their spending, there is less need for goods and services and therefore, a reinforcing loop of diminished confidence in the economy is created. Then, business owners slash prices to try to stimulate sales, which in turn causes more suspicion in the consumer market.

I’ve been through a few of these cycles in the course of my career and recognize that there are a large number of younger workers and entrepreneurs who have not. For them, I offer a few things to consider:

Stay positive. One of the most important things one can do is to stay positive during a slow down. There are many reasons to stay positive. Staying positive keeps you on top of your game, and a positive mindset is just as contagious as a negative mindset is. When a person stays positive during a tough time, he become an inspiration to those around him. He helps instill confidence in his business, co-workers, employees, clients and potential clients. You never want these folks to lose confidence in your business and if you are still confident, they will be, too.

It is difficult to close new deals when you have a negative outlook or if you appear depressed. Now, I’m not saying you should stick your head in the sand and ignore what’s going on around you, but a positive outlook will help you weather the slow down.

Don’t cut your prices. An engineer I know described an article she read recently in which several professionals said they felt cutting their prices were the way to get through an economic slow down. I heartily disagree. According to BusinessWeek SmallBiz Magazine, cutting prices may boost sales in the short term, but could spell trouble in the long run. “When the market turns around, you’ll be stuck with more price sensitive salespeople and customers and less profit.”¹

Focus on value. Now is a great time to focus on the value of your services instead of the volume of sales. During a slow down, there will be more competition. Competition is good because it makes our companies better. Look at ways that your services and products can provide higher value to your clients — and use value to differentiate your firm now and into the future.

The little things really matter. Not that they didn’t matter before, but during a temporary slow down, the little things really matter. Focus on client service, focus on making great impressions, and focus on building relationships for the long term. Call your existing clients. Let them know you care and ask them for honest critique. If you’ve gotten fat and happy during good times, look at your business critically and use this slow down to get better at what you do. Use this time to build a stronger customer centric culture within your organization.

Remember. Learn from the things you are going through now. Look at the things you may have done to contribute to the slow down. Talk about it with your colleagues to build institutional memory. Business is cyclical and most likely you will see another slow down or two again in your career. The things you remember will be invaluable in positioning your firm to weather the next slow down.

Look at the positives. You will get through this, and you and your company will be better for it.

I’d like to hear from you:

• Do you have any tips to “R” proof your company?

• What trends are you seeing in today’s economy?

• What did you do last time you went through a slow down and do those lessons apply today?

Until next time …

Craig

¹Don’t Let the Down Turn Get You Down; Amy S. Choi and Jeremy Quittner, BusinessWeek Small Biz February/March 2008,