No instant replay in small business

There was a great play in the Yankees-Angels game last night. I’m not a huge baseball fan, so relax, this is really about business.

Alex Rodriguez rounded third on a base hit and headed for home. The throw beat him there, and he plowed into he catcher head-on in an attempt to dislodge the ball. The catcher held on, and Rodriguez was called out.

There is no instant replay in baseball. If there was, it would have shown two interesting things.

First, the catcher never tagged Rodriguez. It wasn’t a force, so he needed to clearly put the glove and ball on the runner. He didn’t.

Second, Rodriguez never touched home plate. In his intense effort to cream the catcher (a legal play- the one time MLB looks like NFL) A-Rod never completed his base run by stepping on the base.

The correct call by the umpire would have been to stand silent until one of the two figured out what he needed to do. Until then, the runner was neither safe nor out- the play continued indefinitely.

This may be stretching a metaphor, but not by much. A lot of small business owners I know are neither safe nor out right now. The play continues, but they aren’t aware that they still need to do something.

I need to review the recession facts. This is short, but if you want detail read my long posts on the Triple Threat in January and October. Here’s the gravity:

• The economy needs to grow at 5% plus to absorb unemployment. We do not have Chinese-level expansion in our foreseeable future.
• Consumers’ use of credit as disposable income has stopped, and can’t start again until they pay down debt.
• Real Estate is not going to recover 30% or more of it’s value for a while.
• Monetary policy can’t get much looser than tripling the deficit and zero interest.
• If health care reform passes, it will include a substantial tax effect on those who are working

You don’t want to hear it. Hell, I don’t want to say it. But if your business is going to survive the next couple of years, you’d better be doing more than waiting to see if you’re safe or out.

I am referring to the tendency of many of us to trim our businesses to the break even level, with the idea that a rising economy will return us to decent profitability when it comes. What if it doesn’t come for a while? If you are running at break-even, how do you finance growth? It won’t be via easy credit; that time has passed.

If you aren’t making a decent profit, what happens when your equipment needs to be replaced? New computers? A new truck? News flash- banks aren’t lending to small businesses that don’t have cash flow.

I’m not Henny Penny. The sky isn’t falling, but neither does the S&P 500 reflect the true state of the economy. A couple of difficult years are in store for us. They are survivable, but only if you are very good at what you do, and pay attention. You need to be making the right call now. There’s no instant replay.