Erratic economy may be a good time to step up
By Dan Bobinski
I believe it was Malcolm Forbes who said “If you have no
critics you’ll likely have no success.” In an unstable
economy, taking risks can be seen as hazardous. Some might say
foolish. But success occurs only when people chances. And despite
what critics you might encounter, now might be a great time to take
a risk.
Don’t misunderstand. I’m not advocating knee-jerk
decisions or irrational behavior. Risks in business should be taken
only after deliberate, careful planning with rational estimations
of a likely outcome. It’s just that the unsteady times
we’re experiencing now are no worse than any of our previous
unsteady times, and companies that take risks during unstable times
often come out ahead later on.
Critics might look at the current economy and ask, “What
about the increased likelihood of business failure?”
Interestingly, since World War II, in only two time periods
have we seen an increase in business failures, and both occurred
during times of economic prosperity. One of those time periods was
1979 to 1986 – a time many remember for its continuous
economic expansion!
Essentially, no risk means no reward. I love the story of J.C.
Newman, who, in 1890, was only 14 years old and an immigrant to the
United States. He became an apprentice cigar maker and worked in
the trade for five years – until a recession resulted in
massive layoffs within the industry.
At 19, the unemployed young cigar maker took a risk. He
borrowed $50 for tools and supplies and began his own cigar
company. It would have been easy to criticize Newman for making
such a move during a recession, but within five years
Newman’s company had grown to 70 employees. It grew even
through the Great Depression, and the J.C. Newman cigar company is
still thriving today – all because one young man took a risk
more than 100 years ago.
What I’m trying say is that sitting in a corner during a slow or erratic economy and waiting for things to get better is probably not the best thing to. Sure you might not hear from as many critics, but your chances for future success are greatly diminished, too.
Examine the horizon. Look for opportunity. Think! Rationally
map out the “what ifs” for different scenarios.
Don’t just go one level or even two. Drill down three, four,
or even five levels of thinking. One of the best tools I’ve
found for doing this is the Implication Wheel, created by
Joel Barker (joelbarker.com). It’s not a decision-making
tool, it’s a decision-enhancing tool; designed to guide
thinking when calculating the likelihood of different events
occurring.
When you can have a better handle on predicting potential
future outcomes from your actions you are likely to make better
decisions.
Estimating the potential benefits and potential pitfalls
allows companies to see the best possible paths for stepping up and
getting a foothold while others are stepping back to “wait
the storm out.”
Then, when the economy turns strong again, those companies
with a foothold will be in a better position to make great
gains.
A former boss of mine often told a story about a cigar company that did not fare as well as the J.C. Newman Company. Although I’ve been unable to verify the story, he told of a popular cigar company that decided to save money during the Great Depression by cutting out all its advertising. They were the third-largest cigar company in the world and everyone who smoked cigars knew their name. Their rationale was “why spend the money on advertising since everyone knows who we are?”
Their decision was short-sighted. The company’s sales dropped terribly. In fact, the company was unable to recover from their mistake and they folded. Essentially, their choosing to cut advertising was not logically evaluated to any depth.
That was the 1930’s. But with all the decision-making,
decision-enhancing, and analysis tools available today,
there’s no reason anyone should be making irrational
decisions.
The bottom line here is that we have choices. An unstable economy may seem like a good
time to hunker down and ride out the storm, but is that really the
best choice for the long term? Would taking a few calculated
risks now pay huge dividends for you down the road?
