Tough Econonic Times in 2008

Wow this year has gone fast, and it’s certainly been a while since my last blog entry. There has been such a lot of media lately about the fall of the economy, recessions, and even depressions it’s hard what to make of it all.

What Industry are you in?

I’ve been keeping my eyes and ears open trying to work out what to make of all the media rain fall! It’s bloody hard work listening to the same thing everyday, and talking to other business owners about how they are doing themselves in the current clime. I’ll probably open myself up for a jolly-good-flaming, but oh well, I am entitled to my own opinion after all!

I can tell you it’s hard talking to a mix of people about how the current climate is affecting them financially when things are very apparently going very well for us. Some are faring well, and others not so well. From the people I’ve talked to there are a range of answers, but they largely fall into the following generalizations:

1. Business has slowed
2. The media are full of shit, and they’re blowing this all out of proportion
3. Business is the same

Easy Money?!

To be honest, from the outside looking in, the money is too easy. It’s easier to grab a credit card than it is to get a mortgage, plus if you can prove your current credit arrangements aren’t killing you already you can easily borrow more (or you can tell stories about your current credit arrangements), and if you’re a bigger risk customer, you just pay more interest adding more fuel to the fire. This is part of the reason things are bad as they are, the money is just too bloody easy to obtain.

One thing that has become quite apparent is at present the world presently runs on credit to a large extreme, and all the media hoopla hasn’t been helpful in bring it to the worlds attention… for example… you could previously get 12 months interest free consumer debt in most places (after 12 months interest kicks in - can you say 20%? :P), but now it’s more common to get 36 months interest free (3 years anyone?), or worse still 48 months (4 years?, what a joke!). So while I hope the criteria are tougher, I doubt it because the retailers are hurting and the only way to keep their pockets full is to extend credit on easier terms to keep the registers full, or more fluidly full (that is many payments over X months so you know what’s coming in more accurately).

Just bad at business

One of the things that has hit the news are the number of businesses failing, or closing up shop. From my observation there are 2 kinds of businesses, those that can only do well in an ‘easy’ market (i.e. where we’ve come from), and those that can stand any climate. The ones who can only do well in a busy and growing market have already shut up shop because they only knew how to run a business when things were easy, credit, customers, and people were spending like there was no tomorrow. The businesses which are still standing, are either close to closing (it’s just a matter of time), or they will keep operating as normal, while in a reduced state, that is things are a bit harder, but the basics of the business are sound enough to ride out the rough waters ahead for the next year or so, it’s these business that are waiting for the next growth cycle, and you’ll read about in the media saying how good the market place is (once they’ve realized they’re inflicted enough trouble on themselves - anyone read the articles of late saying how the print media are struggling to sell papers). These businesses which survive will be in a better position to exploit the growth, and will have the necessary skills to keep expanding at a massive rate because all the required attributes in the market place will exists (easier access to credit or saved capital ready to spend), as well as a reliable trading history in a tough economic climate.

Food for thought

2008 has surely been a sobering year. We’ve expanded very considerably (I’m not saying this to blow my own trumpet), and it’s been bloody scary knowing that others are having a hard time. I’m excited to see what 2009 brings and expect that things will be a little slower than usual - it will be nice to catch my breath, but on the other hand, if it all rockets ahead, I’ll be ready, and the team I work with will be prepared for whatever lies ahead.

Bring on 2009!!