If This Goes On…

Today the government is announcing a trillion dollars for “asset based markets.” The government has become a vague amalgam of “Treasury and Federal Reserve officials.” The asset based markets are apparently banks, hedge funds, credit card issuers and private equity funds. If we have reached free money for everyone, it hasn’t trickled down to me and the people I know yet.

Yet the European and Asian markets this morning continue their meltdown. They understand that the right answer isn’t just getting Americans to buy more so that China can make more. (Read Thomas Friedman’s piece yesterday http://www.nytimes.com/2009/03/08/opinion/08friedman.html?_r=1. In fact, read every word he writes on the economy.)

We have borrowed all the money we can, to buy all the stuff we can. We now owe more money for our stuff than we are worth. We can’t shove enough into the credit pipeline to make us all resume our nouveau riche spending habits. We just realized that we aren’t rich anymore.

Even in Texas, which remains relatively unscathed, a friend told me that driving along a Hill Country highway was “like one long garage sale on the side of the road. Every outdoor toy imaginable is sitting at the end of a driveway with a ‘for sale’ sign on it.”

How does a small business react it this goes on? What is your survival strategy?

First, have a plan. A written, quantifiable, trackable business plan. It will help get you through the toughest times, because it reduces crisis decisions to simple execution.

How so? When things get tighter and tighter, the incurable optimism of the entrepreneur is your biggest enemy. One more week, none more month, one more day spent pushing the rock up the hill saps your strength and resources. When you finally do what you have to do, it is frequently too little, too late.

A written plan should have triggers. If you are growing, it will prevent you from overextending in anticipation that the growth will accelerate. If you are shrinking, it helps take the emotion out of difficult decisions.

“But how can I plan when everything is so uncertain?”

That’s exactly my point. Uncertainty is killing us all right now. Even businesses that are growing are delaying decisions they would make in a second if there was no television news. Shrinking businesses are hanging on to every scrap of positive information (“President Obama says the sun is certain to come up tomorrow.”) instead of dealing with the issues in front of them.

The uncertainty may continue for a long time. All you can do is control that part around you. Getting your plan down in writing is a big step towards making that happen.