A recession: is it coming, here now…or mostly in our minds?
A recession: is it coming, here now…or mostly in our minds?
You may be interested to know that the word ‘recession’ means withdrawing or retreating, and so it is one thing to be surrounded by difficult external ‘conditions’ and it is quite another to compound economic circumstances with defeatist internal thinking. It is critical therefore to understand that there are two economies at play at all times in business:
• The first economy, which is the sum total of all business trading results in a region, state or country, which includes your business performance
• The second economy, which is the sum total of all your thoughts and efforts as a company team…including not only management and staff, but also customers and suppliers
I put it to you that you have complete control over the second economy, which consists of these vital elements:
1. Knowing more about your customers than any competitor, so as to improve service and to find what is really needed to improve their performance…and therefore their purchases
2. Improving the ‘propositions’ that you sell, so that they are more appealing, more competitive and more productive
3. Aiming to win more new, quality customers, which is largely dependent on point 2.
4. Aiming to sell more products or services to partially developed customers
5. Helping staff to become more creative, resourceful, professional and productive
6. Associating with the practices of very successful companies, via books, seminars, etc., so as to move in the same, successful direction
7. Inviting greater contributions from your key suppliers, who should rise to the challenge because their trading results are dependent on your business performance
8. Finding ways to reduce or remove business costs that are contributing negatively to your results
9. Improving efficiencies in all areas of the business, so as to reduce costs or to improve performance
10. Learning how to personally improve, in key areas of your work, so that you grow faster than your revenue expectations
These points need to be highlighted and made known to staff, so that everyone understands the obligation, opportunity and necessity to control the second economy. Here is a hypothetical that proves the existence of the second, controllable economy: ‘What would you do if demand for your product or service suddenly exploded, for whatever reason, offering a massive opportunity for increased revenue to your company?’ The answer is obvious, of course: you would go into overtime and shiftwork to meet the higher levels of demand. Now, here is a reverse question: ‘What would you do if demand for your product or service suddenly or gradually reduced in a dramatic way, thereby threatening the earnings or indeed the life of the organization? Surely the answer is the same as with the first question, in that you would go into overtime and shiftwork…of the thinking variety, concerning what can be done to create higher levels of demand. This form of proactive thinking is not simply a response to danger, it is an obligation that is supposed to take place at all times during the life of a business.
All of this became obvious to me many years ago, at a time when I was head of marketing and sales for Schwarzkopf in Australia and New Zealand. We received industry figures that showed that the sales of all suppliers was up by 2% in the previous year, while our results had increased by 28%...which proved to our team that we were not guided by our industry or our region, we were guided by our own thoughts and action!
Finally on this topic, here is a true, quite inspiring and amusing story about talking care of the second economy. While staying at a hotel near Auckland airport I asked the hotel to arrange a taxi for me the next morning. The taxi was a Corporate Cab and this is an excellent service compared to our taxi services in Australia, offering a service one level down from what limousine companies provide. As we drove off I casually asked the driver how business was and he said ‘It’s very slow sir, extremely slow to be honest, in fact I’ve never known it to be this slow and I think it could get slower.’ I regretted having asked the question, however I then asked what he did when faced with such awful ‘conditions’. He said ‘Well sir, I’ve thought about it and you’ve got to stay positive of course (?), and so I go home.’ Puzzled, I asked why he went home when things were so quiet and he said ‘Well I’ve got a lot of things to do at home; for instance I have a paving job to do in the back garden and painting to do around the house…so hopefully while I’m doing those things the phone will ring.’
I was amazed and amused by his belief that business demand would somehow seek him out each day, however I didn’t give him a lecture on the topic for a simple and serious reason: in 1994 I had a perfect year in business, in terms of productivity, creativity and enjoyment, but then in the early part of 1995 the phone wasn’t ringing, and it soon dawned on me that during the perfect year I had failed miserably to plant seeds for future business. When I got back to the hotel that night there was a Corporate Cab card under my door and, since it featured the driver’s name and contact details (most unusual), I used it to call and arrange my pick up the next morning. When the driver picked me up I asked him how he knew that I was a Corporate Cab customer and he asked me what I meant. I explained that I found his card under my hotel room door and he said ‘Oh no, sorry, I put a card under every door in that hotel, and I do the same in many other hotels, and I keep a record of this... because you’re the kind of person I want to do business with, plus sometimes it gets to be very slow in our industry, as in fact it is at this time.’ I asked the driver if his idea worked and he said ‘Well you called me didn’t you?, and sometimes too many people call me and then I have to channel the work off to people who are not as busy as I am.’ I remember thinking ‘I think I’ve met one of them’, and then he said ‘and by the way sir, I put the cards under hotel doors even when I’m busy, because although I have occasionally experienced good times, those times usually leave as suddenly as they appear... so I prefer to be in control of what happens.’ So here were two men, both very nice guys by the way, involved in the same industry, at the same time, facing the same very difficult economic ‘circumstances’... with completely different attitudes to the same problem. One was a victim to the first economy and the second was learning to be a controller of the second economy!
A recession is it coming here nowor mostly in our minds - To learn more about this author, visit John Lees's Website.
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There is no question that the business community, just about everywhere, is heading towards tough times in the short to medium term…due in part to higher interest rates, credit card debt, a fall in employment figures, a reduction in disposable incomes and therefore a drop in consumer confidence and spending, etc. However, the greatest problem facing businesses and business people is making the choice to fight back and control performance…or to opt instead to recede to a place of apparent refuge and safety.
You may be interested to know that the word ‘recession’ means withdrawing or retreating, and so it is one thing to be surrounded by difficult external ‘conditions’ and it is quite another to compound economic circumstances with defeatist internal thinking. It is critical therefore to understand that there are two economies at play at all times in business:
• The first economy, which is the sum total of all business trading results in a region, state or country, which includes your business performance
• The second economy, which is the sum total of all your thoughts and efforts as a company team…including not only management and staff, but also customers and suppliers
I put it to you that you have complete control over the second economy, which consists of these vital elements:
1. Knowing more about your customers than any competitor, so as to improve service and to find what is really needed to improve their performance…and therefore their purchases
2. Improving the ‘propositions’ that you sell, so that they are more appealing, more competitive and more productive
3. Aiming to win more new, quality customers, which is largely dependent on point 2.
4. Aiming to sell more products or services to partially developed customers
5. Helping staff to become more creative, resourceful, professional and productive
6. Associating with the practices of very successful companies, via books, seminars, etc., so as to move in the same, successful direction
7. Inviting greater contributions from your key suppliers, who should rise to the challenge because their trading results are dependent on your business performance
8. Finding ways to reduce or remove business costs that are contributing negatively to your results
9. Improving efficiencies in all areas of the business, so as to reduce costs or to improve performance
10. Learning how to personally improve, in key areas of your work, so that you grow faster than your revenue expectations
These points need to be highlighted and made known to staff, so that everyone understands the obligation, opportunity and necessity to control the second economy. Here is a hypothetical that proves the existence of the second, controllable economy: ‘What would you do if demand for your product or service suddenly exploded, for whatever reason, offering a massive opportunity for increased revenue to your company?’ The answer is obvious, of course: you would go into overtime and shiftwork to meet the higher levels of demand. Now, here is a reverse question: ‘What would you do if demand for your product or service suddenly or gradually reduced in a dramatic way, thereby threatening the earnings or indeed the life of the organization? Surely the answer is the same as with the first question, in that you would go into overtime and shiftwork…of the thinking variety, concerning what can be done to create higher levels of demand. This form of proactive thinking is not simply a response to danger, it is an obligation that is supposed to take place at all times during the life of a business.
All of this became obvious to me many years ago, at a time when I was head of marketing and sales for Schwarzkopf in Australia and New Zealand. We received industry figures that showed that the sales of all suppliers was up by 2% in the previous year, while our results had increased by 28%...which proved to our team that we were not guided by our industry or our region, we were guided by our own thoughts and action!
Finally on this topic, here is a true, quite inspiring and amusing story about talking care of the second economy. While staying at a hotel near Auckland airport I asked the hotel to arrange a taxi for me the next morning. The taxi was a Corporate Cab and this is an excellent service compared to our taxi services in Australia, offering a service one level down from what limousine companies provide. As we drove off I casually asked the driver how business was and he said ‘It’s very slow sir, extremely slow to be honest, in fact I’ve never known it to be this slow and I think it could get slower.’ I regretted having asked the question, however I then asked what he did when faced with such awful ‘conditions’. He said ‘Well sir, I’ve thought about it and you’ve got to stay positive of course (?), and so I go home.’ Puzzled, I asked why he went home when things were so quiet and he said ‘Well I’ve got a lot of things to do at home; for instance I have a paving job to do in the back garden and painting to do around the house…so hopefully while I’m doing those things the phone will ring.’
I was amazed and amused by his belief that business demand would somehow seek him out each day, however I didn’t give him a lecture on the topic for a simple and serious reason: in 1994 I had a perfect year in business, in terms of productivity, creativity and enjoyment, but then in the early part of 1995 the phone wasn’t ringing, and it soon dawned on me that during the perfect year I had failed miserably to plant seeds for future business. When I got back to the hotel that night there was a Corporate Cab card under my door and, since it featured the driver’s name and contact details (most unusual), I used it to call and arrange my pick up the next morning. When the driver picked me up I asked him how he knew that I was a Corporate Cab customer and he asked me what I meant. I explained that I found his card under my hotel room door and he said ‘Oh no, sorry, I put a card under every door in that hotel, and I do the same in many other hotels, and I keep a record of this... because you’re the kind of person I want to do business with, plus sometimes it gets to be very slow in our industry, as in fact it is at this time.’ I asked the driver if his idea worked and he said ‘Well you called me didn’t you?, and sometimes too many people call me and then I have to channel the work off to people who are not as busy as I am.’ I remember thinking ‘I think I’ve met one of them’, and then he said ‘and by the way sir, I put the cards under hotel doors even when I’m busy, because although I have occasionally experienced good times, those times usually leave as suddenly as they appear... so I prefer to be in control of what happens.’ So here were two men, both very nice guys by the way, involved in the same industry, at the same time, facing the same very difficult economic ‘circumstances’... with completely different attitudes to the same problem. One was a victim to the first economy and the second was learning to be a controller of the second economy!
A recession is it coming here nowor mostly in our minds - To learn more about this author, visit John Lees's Website.
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