I am sure everyone understands that no one can carve a forecast for our economy in stone and expect it to come to fruition. The best we can hope for is that analyzing the data, mood, and optimism (or pessimism) will yield – at best – a week or two’s worth of “best guess” of what the economy will do. Yet, in order to run our businesses we need to plan further in advance than that. So it comes down to smoothing out all the two-week predictions into a six to twelve month outcome and making a plan. Americans in general are really bad at this. You only have to look at our personal savings to figure out that we live for the moment. The lack of personal savings, retirement accounts, or home equity is all testament to the fact we would rather buy a new flat screen television on credit than wait until we can afford it. And as businesses, we spin bad news into good so quickly that we end up overstaffed, undercapitalized, and out of sync with the market. We avoid diluting our optimism by creating artificial support for irrational expectations.
So, what’s it going to take to make money in 2009? I won’t win any popularity contests with my opinion. I think it is going to require a healthy amount of pessimism to come out a winner. Systems’ Integrators may have four months’ worth (instead of six) of their pipeline still intact. Most rental-stagers are seeing a stable – albeit 5-10% lower than last year – Q1 ’09. Which means that unless something extraordinary happens in the next two months, there will be some huge drops in revenue for unprepared companies in both segments. Prepared companies will see EXPECTED revenue reductions instead of UNEXPECTED shortfalls. And proactive companies will minimize their revenue rollbacks with aggressive marketing, business development, and diversification. They will maximize their profit by right-sizing their companies for the revenue they can count on. In doing so they will be ready for downturn – whatever it may be.
I admire the optimism of those that say this recession is the by-product of groupthink generated by the press. I do not believe that confidence alone is going to protect anyone from the ill effects of this crisis any more than I think the press can truly and affect the market. For that matter, a President can’t cheer the country into an economic revitalization. The sooner we find the bottom of our personal and business economic realities, the sooner we can return to growth.