Recession Training Part Deux

We’re now in the second half of 09, and the pundits are arguing over whether or not the recession is over, or if it is a depression.  My view is that the fundamental data indicates that the economy in Canada is not in a recovery mode yet.  Similarly, and more importantly to us, the U.S. economy is not in recovery mode either, yet.

The usual cheerleaders for the stock and commodity markets (especially CNBC) are trying to will the end of the recession (that is, they seem to think that they can start the recovery by just willing it so), and the commentators give short shrift to those experts that demonstrate why the recovery hasn’t started.

Even if you can prove an uptick in some key sectors, the fact remains that factories are still closing, others are not hiring new people, new homes are not being built in numbers sufficient to reach ’07 levels, banks are still not lending to most businesses and all small businesses, and new public offerings are few.  No one really knows what the hell is going on in China, as we can’t trust the data coming out of there.

I’m preaching that we might not get back to ’07 – ‘08 levels for many years – it was a bubble after all.  For example, housing starts in the U.S. were inflated by too easy money for unqualified, overcommitted consumers.  Cheap oil, or at least cheaper oil, encouraged purchases of big vehicles again.  Most respected economists believe that oil will march forward to triple digit prices again fairly soon, though there is no consensus as to how fast or how high.

I highly recommend that every small business owner should read Jeff Rubin’s new book, Why Your World is About to Get a Whole Lot Smaller, Random House.  He chronicles some widely known but ignored facts, plus some lesser known and surprising facts and trends to show why our world (where we live, buy, sell, eat, use energy, etc.) is going to go thru major changes.  We can either ignore these prognostications or we can consider them, and adapt ourselves accordingly.

For small business owners, there will be opportunities from the changes, but of course it is a mug’s game to try to chase the brass ring created by economic and political changes.  A few things seem to be fairly certain:

  • You might not sell as many or as much of your product or service in the future as you did at the height of the ’08 bubble, depending on your sector and ability to innovate and adjust
  • Anything which uses a lot of energy is going to cost a lot more unless major changes are made, quickly
  • Globalism and trade amongst nations, or intra-nations like Canada and the U.S. (large geographically) will actually reduce; we will buy and sell locally to a greater extent
  • Food, water, land, and quality/adequacy of labour, the basic essentials of life and industry, will be at the forefront of everything
  • Consumers will demand that the stuff or services they buy are at least environmentally neutral
  • Successful businesses will balance these factors and make more money from less volume, perhaps higher margins if other criteria are met
  • The pace of change will continue to accelerate.

If this is scary to you, it’s probably a good time to sell your business!  Give me a call.