Business Cycles and Recessions

Business cycles and recessions go together just like business cycles and profitable times.

Whether you're starting a business, expanding a business or managing a business, here are some ways to make sense of the current business cycle and recession.

#1 You control your cash flow
Whether you like federal economic policies or dislike them, there's not much you can do to impact the day to day decisions made in Washington, D.C. Yes, you can vote, write letters to your congressional representative and write opinion pieces but don't think your success or failure is completely dependent on forces beyond your control.

Think about what you can do to increase your customer base, cut expenses, manage your cash flow effectively.

#2 Sweat the Small Stuff
The reality of recession is the businesses in the middle hurt worst. That statement is according to Dan Kennedy in his December 2008 newsletter. However, he writes that all businesses are impacted by the need to retain customers. The big chains may lose customers because of the small stuff such as the counters at Starbucks cluttered because of the clutter from impule purchase items. Small stuff matters a lot.

A company that sweats the small stufff and is managing their business cycle well in the recession is Chik Fil-Et even though they're closed on Sundays.
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#3 Educate yourself
Learn some key economic terms and a bit about history. Here's an excerpt from an online article about recessions and business cycles by Christina Romer.

Burns and Mitchell defined a recession as a period when a broad range of economic indicators falls for a sustained period, roughly at least half a year . . . .

expansions and recessions occur at irregular intervals and last for varying lengths of time. For example, there were three recessions between 1973 and 1982, but, then the 1982 trough was followed by eight years of uninterrupted expansion.

The 1980 recession lasted just six months, while the 1981 recession lasted sixteen months. For describing the swings in economic activity, therefore, many modern economists prefer the term “short-run economic fluctuations” to “business cycle.”

Finally, to navigate the current recession, make sure your skills are sharp, fix the snags in your business operation, and concentrate on offering value to customers and those who work with you. That's the best way to move through this business cycle and the current recession.