Small Business Advice
The essence of optimism is that it takes no account of the present, but it is a source of inspiration, of vitality and hope where others have resigned; it enables a man to hold his head high, to claim the future for himself and not to abandon it to his enemy.
— Dietrich Bonhoeffer
If you pick up a newspaper or watch TV, you are going to be bombarded by reports of how bad the economy is doing. Indeed, the construction business is down, retail sales are down, the auto industry is doing poorly, unemployment is increasing and the stock market is in a free fall. On top of that, we have a large liquidity crunch with our financial institutions. None of this is good news at all!
The problem is that we have had a housing bubble burst. That is, people were able to purchase homes with unsafe financing means, and as a result, the prices of these homes increased until there was no one left to buy them at these unrealistic costs. This is so similar to the dot com bubble where investors bid up the price of tech stocks to unreasonable levels, and then the stocks crashed.
In 1720 the price of stocks in South Sea Company (a financial institution) soared to the stratosphere and then imploded. In 1721, Sir Isaac Newton said in reference to this bubble, “I can calculate the motions of the heavenly bodies, but not the madness of people.” While Sir Isaac Newton was declared by many to have a greater effect on science than Albert Einstein, he lost his entire life savings in this South Sea bubble.
In combination with the housing bubble, we are experiencing an economic slow down. Our economy and capitalism is predicated on business cycles. Cycles have their ups and their downs. From 1937 to the present, we have had 13 recessions that varied in length from 6 months to 16 months. The important thing to remember here is that with each of these recessions, we emerged into a dynamic, growing economy. I promise you that we will come out of this recession probably in late 2009 or early 2010.
While the news is not good now, concentrating on the negatives that are bombarding us daily is not good for you or for your employees. All of this negative news is causing uncertainty and fear in your staff. They are fearful for their jobs, their families and so much more. If there is ever a time to be especially kind and compassionate with your staff, this is it. They need to see you upbeat showing them that we will get through this and be even more prosperous.
One thing that you can do is try not to watch excessive amounts of TV. There is so much gloom out there that it is contagious. You just cannot afford to catch this, “gloom flu.” More than ever, your staff needs you to be an upbeat leader who focuses on the positive and demonstrates the certainty that we will come out of this economic morass. Watching negative news stories will not help this at all.
Now go out and make sure you clearly communicate to your staff that this market will turn around, and things will get much better — probably within the next year.
You can do this!
Jerry Osteryoung is the Jim Moran Professor of Entrepreneurship in the College of Business at Florida State University. He is also the Director of the Entrepreneurship Program at FSU and Executive Director of the Jim Moran Institute of Global Entrepreneurship. He can be reached by e-mail at firstname.lastname@example.org or by phone at 850-644-3372.