For months we've been hearing the pundits and prognosticators talking about whether there is or isn't a recession. The only thing that quiets them down seems to be talking about gas prices and whose fault that is. Unfortunately, almost none of this is any real use to small business owners like the kind who run cabinet shops or make custom furniture.
Chances are you don't care one iota whether some official in Washington, D.C., or on Wall Street officially declares a recession. You know well enough by your own sales numbers what the economic climate is in your neighborhood. The reality check I get from regularly talking with real shop owners is that some areas of the country and some types of businesses are in a slowdown, but many are not. For example, shops that already cater to high-end customers, especially in pre-existing residential applications, seem to be doing fairly well. Shops in new construction in low to mid-range applications are facing more trouble.
Dealing with reality
Of course, knowing that doesn't really help you or your business. As a shop owner you need to deal with your own reality and take action based on that not based on some report well removed from your locale. So, what kinds of things can a small shop owner do to analyze and act on changing economic factors in an ongoing business? What it really takes is a process of looking both backward and forward.
Looking in reverse is the first step to take, and it requires good records. You need to know whether the change in business volume you are experiencing is something you've experienced before. For example, many custom shops experience regular seasonal and cyclical swings in business. A good look at your own records can help determine how much those swings are contributing to any larger economic trends. People tend to buy less new furniture in the summer anyway, so if furniture is your market, don't overestimate an economic downturn without first considering usual expected drops in business.
The next step is to see from your records how long any of the seasonal or cyclical swings last. Compare that data to what's going on now. How is what you are experiencing today different? Pay particular attention to signs of an upswing. This all relates to the age-old market advice of "buy low, sell high." But nobody ever seems to know when the low is lowest or the high is about to bust. Looking for trends in your records can help.
And that gets us to the looking forward part. Too many shops react to declines in business or economic scares by pulling back. They cut marketing and promotion activities. They may lay off staff. They put off expansion and upgrade plans. All of which may be justified, but it might also be shortsighted. Cutting back on marketing and sales efforts may cost you market share and reduce your visibility for the new customers who will drive improvements in the local business climate. Laying off staff might mean you aren't equipped to handle new business when it returns. Similarly, putting off an expansion or upgrade may also put you at a disadvantage when business heats up again.
The key is to be fully revved up and ready to accelerate as soon as your local business climate improves. You don't want to be watching new business go elsewhere when things do pick up because you've dialed down so far you can't catch up. Just as every boom eventually busts, even more true is that every downturn is followed by an upswing. By looking forward and focusing on your own numbers, you'll be able to grab onto that fresh upward momentum faster and gain new customers and energy before the pundits have even figured out what's happening.
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