What recession?

The experts all agree, and our own experiences and observations confirm, that we are in the grips of a recession. No one really knows when it will end and what will be on the other side.

Yesterday at lunch I posed a question to a business owner, “How is the recession affecting your business?”. His quick answer initially startled me then got me thinking. He replied, “I refuse to participate in the recession, so it does not affect me”.

I will say that he provides productivity software to large companies, and thus far these types of businesses have been doing very well.

Yet there are two aspects to the recession (or anything negative). The first is the reality. The second is how we respond to the reality. If we acknowledge there is a recession but refuse to participate our outlook, actions, and fortunes, will be totally different from what they might be if we succomb to the recession with a fatalistic attitude. Something to think about.

The Economy

I had lunch yesterday with a group of about 20 other business owners at the Federal Reserve Bank in Cleveland. Through COSE, the Federal Reserve had gathered us to talk to us briefly about where they see the economy, but more important, they wanted to get a snapshot of the economy through the eyes of small business owners. I commend them for the initiative. I was honored to be included.

The Fed’s presentation was  a series of graphs, with commentaries on the graphs, the gist of which was that an economic recovery is anticipated half-way through next year. Honestly, I really do not think the experts have any better crystal balls than the rest of us do!

Some of the owners present indicated that their businesses had not yet seen a negative turn due to the current crisis. Many, however, did relate real concern for their businesses. Concerns about getting new credit, and even keeping existing credit lines with banks, was mentioned a number of times. One person pointed out that the fine print in credit line agreements allows the bank to change the terms or even terminate the line at any time.

A commercial builder was distraught because his lumber supplier, a third generation company, has just closed due to lack of credit and falling lumber prices. The builder is also concerned that tight credit will also either delay or cancel future projects.

A large candy maker is solving her credit concerns by requiring a 50% deposit with all orders.

On the positive side, a software developer who helps larger companies with document management systems, said her company is doing very well, although payments are getting slower. I do believe that businesses, like hers, which improve productivity should be quite recession-proof.

I give the Feds credit for listening to small business owners. I hope they, and other government agencies, do much more listening in the future.

Will Limkemann
Limkemann Business Advisors
440-871-0976
www.neobizadvisor.com