Some have termed our current economic situation as “the worst financial crisis since the Great Depression.” Gloom-and-doom news reports and commentaries abound. But how much of this is true, and how much is merely perception?
In the current state of affairs-what some have termed “the
worst financial crisis since the Great Depression”-psychology has undoubtedly
played a key role. Fear has bred panic, and panic has led to knee-jerk decision
making that has had a ripple effect on the global economy. According to Lea
Winerman in a recentarticlein PBS’s “The Online News Hour,” this effect is part of what’s known as
“behavioral economics.” Winerman
interviewed psychology professor Elke Weber of Columbia University,
who said, “If you look at the huge fluctuations in the market we've had in the
last week [...] it's vastly larger than the change in actual information.” Notes
Winerman, “That's because investors tend to make decisions based on the most
recent information they have - not necessarily the most important.”
And what information have we had? Largely doom-and-gloom, depressing-even
alarmist-news reports and commentary, for anyone following much of the popular
media coverage. But how much of this is true, and how much is merely perception?
In the October edition of the National Federation of Independent Business
(NFIB) Small Business Economic Trendsreport,
released on Oct. 14, the commentary notes, “If the drum beat of recession,
depression, global catastrophe are eliminated from the vocabulary of regulators
and the media, some sanity may be restored to expectations.”
As the events have unfolded over the past several weeks, I have often wondered
what might happen if everyone just turned off their TV and stayed offline for
awhile, long enough to let the dust settle. Or better yet, what if we were
suddenly flooded with positive news? Does the theory of a self-fulfilling
prophesy also work in reverse?
Some might say that’s what
we’ve had for years-hence the bubble of unrealistic expectations. And
certainly, we have to play it smart to protect our individual finances and our
businesses. I know times are tough, and people are losing their jobs. The
threats we face are very real. But focusing on the drop-offs has never helped
anyone scale a mountain. If we’re going to assume the worst, shouldn’t we also assume
that we have the resources-intelligence, creativity, determination-to get
through the situation?
In fact, according to the October NFIB Trendsreport,
many small business ownerswerefeeling better about the prospects for the future prior to last week’s
record declines on Wall Street. “The Index of Small Business Optimism rose 1.8
points to 92.9 (1986=100) [in September], continuing one of the longest strings
of recession-level readings in the history of the survey (started in 1973), but
headed up for the second month in a row in spite of all the hoopla on Wall
Street and Washington, D.C.,” the report notes. Additionally, 14 percent of
respondents said that they believed general business conditions would be better
in six months-which doesn’t sound like much, until you compare it to the -22
percent figure in January of this year. Indeed, every month in 2008 except
August (+4 percent) and September had negative readings. That makes the
September figure look even more positive.
Everyone wants to
know what the future will bring, but no one has a crystal ball. Maybe the global
government bailouts will work; maybe they won’t. Maybe the November elections
will hold the solutions to all our problems, or maybe not. I, for one, am tired
of all the talk about the crisis in the world at large. Let’s focus instead on
short-term and long-term strategies each of us can put into play to keep our
businesses viable and position them for even greater success once we make it
through this challenge.
What about you? Are you taking
advantage of a slow business environment to focus on education? Are you adding
value to your services by branching into GIS or other related capabilities? Are
you becoming more creative in your marketing efforts? E-mail your strategies to
me firstname.lastname@example.org share them below.