We’re all asking if we’re out of this recession or not. The truthful answer that I, and probably everyone, should give is that I’m not sure. Knowing whether we’re in recession or not is a strange statistic. Officially it’s a statistic that doesn’t come to light until well after the event – Has the Gross Domestic Product, GDP, gone down for the last two quarters in a row? If GDP, a measure of the total economic output of the country, has gone down for two quarters in a row then we’re in recession. Aye right, and I’m supposed to make decisions about running my businesses based on what you could call economic ancient history.
I tend to form my view of the business climate by the trends of my order book and monthly sales. If they are staying much the same then I’m holding on but if they’re going down I take that as an indicator that the economy is slowing. (That’s assuming that I have checked carefully that the decrease in sales is not a function of something completely different like competitive offerings or competitor pricing changes and that I am thus comparing apples with apples.)
Can we get any clues from the big boys? Well, in terms of retail Marks and Spencer and John Lewis showed pretty good signs of growth in their last announcement, John Lewis being particularly spectacular. But is it apples with apples to compare historical figures with current performance? After all, VAT went back to its old level at the beginning of the year. We’re almost certainly looking at tax rises sometime this year. Interest rates will go up this year making the recent times of the mortgage joy com to an end pretty sharply. All these things will take money out of consumers’ pockets and have an impact on everyone’s sales.
Tip from Shaf – Keep your head down
I think it’s too early for us to change our attitude to the effect of economics on our businesses: basically we’re still running businesses in a recession. Keep a tight control on costs and continue to look for cost savings. If you’ve been able to hold on to all your people so far, well done; but don’t do anything too adventurous at the moment and monitor your sales and order book numbers reacting fast when they show bad signs.
On a wider perspective I’m looking for some really positive and practical signs before I think any of us can feel confident that the hard times are over. I’d like, for example, to see the banks lending to small businesses properly again.
Having said that, any recession means that there can be big opportunities out there. Maybe we should be looking at other small businesses to see if they have fared OK. If we see some that are showing signs of difficulty then we should be looking for a chance to step in and see if we can get some shares in the business in return for helping it back to health. That’s why I like being an entrepreneur; we can see opportunity in any economic situation.
If it feels like a recession then operate as though it is one.
