Jim Verdonik in the Triangle Business Journal writes that “You don’t need a weatherman to know which way the wind blows”, by Bob Dylan.
What’s your weather information source? Do you trust weathermen? Or do you look out the window to check? If your weatherman had been struck by lightning a dozen times, would you get a new weatherman?
I ask, because it’s 2010 economic forecast season. Even if they’ve been wrong the past 10 years, “experts” can’t resist the temptation to try again.
Personally, my New Year’s resolutions included not making economic forecasts this year. Instead, I’ll advise about steps to consider in light of the consensus forecast of the “experts.”
Economic forecasters are boldly predicting we’ll see bumps in 2010 but that falling off a cliff like in 2008 isn’t likely. We may see improvement, but don’t be surprised if we don’t. It’s the weather equivalent of: “Partly sunny with a chance of scattered showers.”
The experts are covering all the bases and not going out on limbs. Perhaps that’s a good theme for running your business in 2010. Here are a few tips about how to deal with partly sunny with scattered showers.
- First, remember the millions of people fired in 2009? They’re both risks and opportunities. Should you rehire at first signs of a recovery or wait? There’s lots of talent available willing to work cheap, but it’s painful and expensive firing people – which is what will happen if you bet wrong on economic recovery. Do you want to risk running a revolving door hiring and firing? Suggestion: Weed out the remaining underproductive people in your organization and recruit better talent. Use this opportunity to upgrade your team’s quality while keeping expenses and headcount the same.
- Second, the world is still de-leveraging. What’s your company’s balance sheet look like these days? Should you increase debt to grow? Build up equity? Reinvest profits? Take profit out to rebuild your personal balance sheet? There is no one-size-fits-all answer. Suggestion: Consider why you own a business. Is being bigger your goal? Interest rates are low, if you can get a loan. Maybe you’ll expand into a rising marketplace. Or do you want stability and personal financial freedom? If so, take some profits out of your business instead of borrowing. One warning: Be careful about personally guaranteeing debt. Pay off personally guaranteed debt, if you can. Taking business risks is one thing, but it’s probably not the time to put more personal chips on the table.
- Third, with health-care law changes, there will be winners and losers. This year’s biggest potential swing factor is how you play the health-care game once Congress deals the cards. Make the effort to determine how to reduce employee health-care expenses in light of whatever new law emerges. Now isn’t the time to be an ostrich with your head in the sand.
So, no predictions from me this year – just some card game advice about knowing when to hold them and knowing when to fold them.
Have a prosperous New Year!
Read more at: Triangle Business Journal