No One Has a Clue What’s Going to Happen - Victor Cheng - The Recession Proof Business
MONDAY, MAY 4TH, 2009
Not even Warren Buffet
is willing to predict what’s going to happen in the economy, if you watched Good Morning America
today. That was Victor Cheng’s message at the Fortune Small Business Growth Summit as well.
Victor Cheng, author of The Recession Proof Business
, said to expect uncertainty. This is the new normal. He also had an optimistic view for business, those that would be willing to think differently and adapt. In fact he had a number of very positive stories about businesses who did just that in previous recessions and depressions that rose to significant prominence.
One reason he felt small businesses have a particular advantage: speed. The rules have changed, and those who succeed will have to change faster than the economy and your industry does.
Fortune Magazine was one example Cheng offered to a business that started just 90 days after the Great Depression started. Most predicted failure, yet in a world where so many had lost their fortune; there was a hunger to get it back. Fortune Magazine prospered by following several of the rules Victor Cheng discovered by review past recessions and depressions and learning the lessons they offer.
Rule #1: Adopt a Recession Proof Mind Set
Rule #2: Solve a Problem That Gets Worse in a Recession
Rule #3: Make Your Business Competition Proof
Rule #4: Market More Aggressively Not Less
Regarding Rule #1, Victor noted that in the present economy the news media is going to present a lot of proof that the world and our US economy is going to hell in a hand basket. The reality is that bad news sells, and they’ll be pumping out as much as they can to get an audience to beat their competitors.
As a business person you have to insulate yourself from these stories and keep perspective. The US Economy is $14 Trillion
. In a recession the economy will dip 1-2%, even in a depression it will dip 5% and even at that rate it will still be worth $13.3 Trillion dollars. A lot of money is still being spent; the trick is to follow the money. One segment like new cars or new homes might be down 50% but others are not, and some are even increasing.
Victor Cheng noted that if you owned a home that had a creek running through it, and suddenly the creek ran dry you could sit there and whine about it or go out and discover where the dam was that is obstructing your creek. Don’t be the person who sits there and whines. Go figure it out.
Keep a perspective on the economy and make sure you follow rule #2. In the United States each year approximately 40,000 people will die in car crashes. Typically in that same year there are 2 plane crashes where 200 people will die. Which do the media cover and make a bigger deal out of? The two plane crashes.
Cheng’s tips for having the right mind set:
1. There’s still money out there, but you have to go find it.
2. Base Business Decisions on facts not on headlines
3. Exploit the Opportunities that Recessions create.
4. Adapt or Die
We’ll explore more of these tips and Cheng’s rules in the next blog, particularly why right now is one of the best times to be a small business.
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