Jim Huston: A look back… and forth 2012

Jim Huston

Looking back, 2011 has been the year of continued economic malaise. It's the third in what I anticipate to be four years of continuous economic doldrums, all of which started in mid-2008. Markets and the economy, in general, have not improved. Company growth, if it has occurred at all, has first been the result of internal adjustments to external economic realities followed by external growth in sales and/or market share. You could say 2011 has been the year of same ol', same ol'.
 

Where we're headed. We're told that one definition of insanity is expecting different results from doing the same thing over and over again. This applies to all levels of the economic spectrum from the federal, to the state, to the local and to the individual company. Unemployment seems to be stuck near the 9 percent mark. Retail sales are stagnant. Construction and new home sales are static. Maintaining the level of revenue achieved in 2009 and 2010 seems to be the primary goal of, and new norm for, many green industry companies. However, in order to improve either the "top" or the "bottom" line, you have to do something not just different — but better. Repeating what got you to where you are won't necessarily get you to where you want to be.
 

What you can do about it. First, you need to quantify (analyze and measure) what is important within your business. You need to: prepare a detailed budget for 2012, develop a simple yet managerially useful chart of accounts; benchmark your business in order to understand it better; utilize and/or implement an estimating system that calculates such things as gross profit margin, net profit margin, sales per man-hour, unit prices, etc.

Second, you need to address the emotional side of the business. Develop professional and non-professional relationships with like-minded, success-oriented people. Build and work these relationships through associations, business networks, suppliers, manufacturers, etc.

Third, get politically active. Regardless of your political leanings, don't be a bystander during the 2012 election cycle. The economic issues that we are facing cannot be corrected at the company, local or state levels alone.
 

Predictions. In the run-up period prior to the November 2012 elections, the economy will probably remain much as it is. The service and maintenance sectors will continue to solidify while becoming more competitive. Construction projects, both new construction and renovation ones, will continue to remain stagnant in most markets. In other words, things will, more than likely, remain much as they have been the last three years. Regardless of who gets elected president, if the current fiscal policies remain in effect after the election of 2012; the resulting uncertainty, debt load, lack of financing, increased unemployment, etc., could have devastating effects on all levels of economic activity.

If fiscal policy is modified to allow access to capital markets by small businesses, to lessen the bureaucratic burden of government, to create a predictable business environment and to lessen our national debt load, we could see a rather quick economic turnaround.

First, there would be a psychological turnaround. The stock markets would improve as would consumer confidence. Second, as new fiscal direction was implemented, long-term improvement would sustain the psychological upturn.
 

Conclusion. There is much that an entrepreneur and her team can do to improve both their top and bottom lines.

If you don't get proactive at the company level and implement both sound subjective and objective metrics, you can't expect things to improve. Same ol', same ol' is not good enough. This applies to the national level as well.

If national fiscal policy is improved, I can't guarantee that business will become "fun" overnight. However, I can guarantee that if fiscal policy does not change at the national level, having fun will be the least of your worries. Get involved and become pro-active at all levels of the economy. The company you save might be your own.