When the business cycle is up, it seems like everyone makes money. Those who invest in the stock market think they can do no wrong, everything goes up, almost regardless of what they buy. Still, even if you can sell ice to Eskimos when the business cycle is cooking along and there is plenty of money flow, that does not mean your business model is long-term viable; some businesses are not viable. Thus, it only takes a little downturn and the wheels come right off that carbon-nano-tube constructed wagon.
Of course, that is only one of the issues, indeed, mismanagement is often a problem too. When business is good and customers are lining up, you can mismanage your business, and still make money. Of course, when the economy turns South, and there are fewer customers, meaning less income, all of a sudden efficiency becomes critical; a life or death situation. And some businesses will fail, but that does not mean the business is no good, or that the slow down during the recession is what killed it, rather the poor management caused its demise.
Then there is the issue of customer service, and during a rocket ship market, it seems nearly impossible to get good service anywhere, and when the economy gets bad, every store owner and employee all of a sudden wants to kiss your butt, so this is one issue where poor customer service will be the death knell of any business. During a recession, you need good management, good service, and good marketing.
Speaking of marketing, we all know that poor marketing is another cause of business failure. During a recession it is harder to get customers, so a business must market more, but without spending the money they don’t have due to the economy and slower sales. Also, during recessions there is the changing consumer sentiment, and more people shopping around for bargains. Still, a smart business person can make it in lean times.
But if you don’t want to get with the program and get tough with your business, well, you can always go bankrupt and blame it on the recession, and well, most people will buy that excuse; but I won’t.
Lance Winslow – Lance Winslow’s Bio. Lance Winslow believes that when you hire a home builder that you make sure they are solid as a rock and that they will be around tomorrow; General Contractors.