Any idiot can make money in a boom economy. It takes savvy, quick thinking and a bit of luck to prosper in a down market.
Business had been harrowing before terrorists struck the World Trade Center and the Pentagon in September. It has become even more difficult in the months since. We may not fully understand the economic impact of these attacks for years to come.
Still, business goes on. Shopkeepers are selling sandwiches to bond traders on Wall Street. Designers are creating Web sites for small businesses. And contractors are helping homeowners build additions.
As you move forward into 2002, draw on the vital lessons of 2001. What follows are case studies of the year's important business trends and events. They offer a mini-education on everything from missed clues and miscues to burgeoning opportunities. By avoiding others' mistakes and tapping the keys to success, you will survive the tough times and prosper in the years ahead.
Mind the Consumer
As we headed into 2001, there was a big warning sign flashing for anyone who cared to look. Consumer confidence, as measured by The Conference Board, had begun a steady downturn from its peak in September 2000.
"There's a big debate whether [consumer confidence] is a leading indicator or a lagging indicator," says Todd McCracken, president of National Small Business United, a small-business advocacy group. "But the small-business owner should pay attention and prepare themselves if a slowdown is on the way."
A YEAR LATER:WHOOPS! "For 2001, consumer spending will be excellent. Right now there is really no weakness in the country."
Unfortunately, many business owners don't take the time. "Most entrepreneurs don't even pay attention to [economic indicators]," says David Minor, the William M. Dickey Entrepreneur-in-Residence at Texas Christian University (TCU) in Fort Worth. Entrepreneurs are usually too busy building their businesses and need to make a mental mind shift-and perhaps some tweaking of their business operations.
When the consumer begins getting conservative, says McCracken, start eyeing your investment plans carefully. One way to do that without derailing them completely is to lease rather than purchase equipment, suggests Minor.
The same solution works for your staff. Minor advises outsourcing operations or hiring temporary workers instead of hiring new employees. At the same time, he says, rely on your employees to find solutions that keep growth rolling. You need to share your concerns that swooning consumer confidence portends bad days ahead for your business.
"If [employees] are involved in how the problems are addressed, then you get buy-in from these folks," he says. "They're more willing to do what it takes to fight through these tough times." Your workers may exchange pay raises for bonuses tied to business goals, but they won't do it willingly unless you bring them into your business decisions.