“Are we there yet?”
No. I just told you we are three hours away. Look at the beautiful scenery.
Why don’t you read a book?
“I get sick to my stomach when I read in the car.”
How come it only happens with books and not comics?
“Because comics are fun.”
Let’s play 'I Spy.' I spy with my little eye something that starts with…..D.
“The D on the gear shift thing.”
Hey, good try, but no cigar.
“I give up.”
Honey, you should never give up. Try again.
“Alright. Is it Depression?”
What do you mean by depression, honey? Are you o.k.? What do you mean…depression?
“Well dad, you are always talking about a recession or depression or something, so I figured it must be in here somewhere. Is it?”
Well, yes and no.
If you own your own business, you wake up in the morning wondering if this is a recession or a depression. Everything in business, once you know the basics, is really the ability to predict. When you go to bed at night you ask the same question that started the day.
Life-changing decisions are in the air. Do you lay people off? Can you lay people off? Do you look at time sharing? Do you double down and try to increase market share when you know your competitor has the same problems you do? Do you buy the competition or sell to the competition? Do you make productivity investments which will lower your costs over time or defer capital investments until the market firms up? Should you stop watching TV and reading newspapers because all they do is report the news and the news is not good? Do you call the bank to give them a full briefing or do you change your phone number and wait for the knock on the door?
Ultimately, everything turns on your kid’s central question: are we there yet? In this case, the “there” is the bottom of the recession.
The answer is no, we are not there yet. We are in for Tectonic change and the change is just getting started. Market and business conditions will not bounce back to last year's levels.
The reason, it seems to me, is self-evident. The values in the stock market a year ago were never real. They were propped up by extraordinary debt accumulation that will not soon happen again. It is unlikely banks anywhere in the near future will lend people money to buy houses they cannot afford. They may not even lend you money to buy houses you can afford.
Secondly, we are at the end of the great boomer spend-a-thon. Believe me, if boomers have any money left over, they will not be spending it on new cottages or renovations. More likely, it will be on class-action lawsuits against money managers who lost their money. They have put their kids through school (well, not me, yet) and survived them coming back home after university. At the moment, they are more concerned about their pensions than a new armoire.
This change cannot be underestimated. A huge portion of our GDP is consumer-driven. That will shrink. If you are in business you must understand the new environment and its implications. That means be the market leader or go home. You don’t have to be big, but you do have to be smart.
Consumer spending is not over but it will be restrained like no time in our lifetime. It will be careful. It will demand quality and value at the same time. Those of us in the consumer value chain will have to be smarter at what we do and provide exceptional value. Those who love their craft and are not drowning in debt will survive and prosper. Others will leave the game and make room for those who still enjoy the chase.
“So are we there yet?”
No honey, not yet. Let’s enjoy the trip. We’ll have lots to do when we get there!
President, Laurentian Media Group