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Choosing Not To Participate In the Recession

Written by: Dave Ferguson

Article Overview: Business owners face choices every day. The key to success is focusing on facts and opportunities and letting the rest of the world focus on fear.

Choosing Not To Participate In the Recession

Recently, many prominent people have been warning that we are headed into a recession. As a business owner, I have decided that I’m not going to ride that bus. You can make the same commitment.

Let’s look at the facts. According to the Census Bureau, businesses with fewer than 20 employees in 2002 constituted over 97 percent of all businesses and generated over 17 percent of total sales. And, that figure has been growing. I think we can agree that small business has influence.

So, why are people suddenly focused on recession? It’s true that there are many segments of the economy affected by the slowdown in home sales. But the “subprime crisis” was not the cause. According to Federal Reserve statistics, subprime loans are only about 14 percent of all loans and the default rate, including subprime loans, has been less than 3 percent of all loans outstanding. According to my friends in the mortgage business, anyone with good credit and an accurate appraisal can get a mortgage at a reasonable rate.

So, what caused the sudden panic? It’s simply the result of greed and fear. It was greed that drove people to make those high interest loans and now fear of losing their investment has caused them to retrench. Why should we accept their irrationality?

As businesspeople, our job is to look at the facts and plan accordingly. We spend our money to generate revenue and the difference between what we spend and the revenue we receive is our profit. But my revenue comes from what others spend, and so does yours. If we all suddenly fear that we can’t generate as much revenue, and then decide to cut expenses, everyone’s revenue goes down. Our profits will disappear. We will create the recession we all fear.

Before transportation and technology transformed the way we do business, we did business with our neighbors. We were keenly aware of the opportunities and threats and tried to help everyone in the village succeed. Business is still all about creating and maintaining relationships - with customers, suppliers, and the people who provide professional services. As I work with business owners I am constantly surprised at how few regularly talk to, or even know, their neighbors. These are the people who could refer you business, who would be willing to help you if you only asked.

Being smarter about the way you do business means looking for win-win opportunities. Spending money locally is one of those opportunities. Remember that the lowest price might not be the best solution. Before making a purchase, consider quality, reliability and the value of your time. Instead of supporting the other economies of the world, see if there’s a way to do business with your neighbors. And, don’t keep it a secret, let them know why you are doing it. Inspire them to see the possibilities. You will be investing in your own success. Franklin Roosevelt said it best: “We have nothing to fear but fear itself.”

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Article Tags: accurate appraisal, business owner, businesspeople, census bureau, default rate, federal reserve, greed and fear, high interest loans, irrationality, maintaining relationships, mortgage business, neighbors, profits, recession, reserve statistics, segments, slowdown, subprime crisis, subprime loans, sudden panic



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