I am always asked when I run into people: how is business? And my honest reply is: Its great! We are really busy and growing… Almost every time, the reaction I get is… it’s good to hear that the real estate market and the economy are improving…
I guess they don’t understand we are not doing well because of the economy; we are doing well despite it!
Most are hoping and waiting for the economy to recover… it’s like waiting for your business to turn around when all your fundamentals are upside down and you are beyond the point of no return… Oh, and also, you and your partners have radically different views of what needs to be done!
The US has a debt of almost 15 Trillion (ok some exclude internal debt so subtract 4 or some include Fannie & Freddy so add another 5…) , cost of working capital is on the rise while access to working capital is diminishing. Inflation will go up and economic growth is on a downward momentum. Our budget deficit last year was close to 1 ½ trillion (3.5 trillion expenditure with a 2.1 trillion revenue). Our debt is 98% of GDP. The highest ratio since the US depression in the 40’s… By the way, Latin America’s is about 25%…
I can only see things getting a lot worse. It will probably take many years before our Economy can get back on track, and that’s assuming that our government, people and businesses take appropriate and immediate action… And we can all see our government’s ability and will to manage this problem.
How are we going to operate our business, grow and thrive in a long term environment of uncertainty, economic distress, high financial cost, and many other significantly adverse conditions?
The bad news is that most businesses won’t be able to… They will fail and fade.
The good news is for those businesses that will prepare to weather the storm, differentiate themselves significantly, and commit to delivering excellence & significant value to their customers. They will succeed and most probably enjoy long term competitive advantage in their markets for many years to come. Barriers to entry are way down, most competitors are in survival mode, not innovative, “let’s take over the world” mode!
While most of us are hoping for better times, I believe we all should be preparing for an even worse and severe storm… The upside of being prepared is significantly higher than the downside of having too many canned goods in the pantry…