As part of my Vistage worldwide membership I receive their updates on the economy, and the CEO Projections for 2019 caught my attention. It seems that CEO confidence in the economy has continued to decline into this year. Although CEOs expect revenues to rise and even profitability to improve for now, they see economic headwinds building and feel the pressure of rising wages and unfilled positions. “The challenge for CEOs in 2019,” according to the report, “is figuring out how to maintain growth in the face of a potential slowdown.”  The recent March 23^rdWall Street Journal reported that investor anxiety over the world economy has increased and there are concerns that this may be the start of a consistent downturn.

If you couple these reports with a look at some of the longest economic expansions in the United States since 1900, you can see that there probably is some reason for concern:

• The U.S housing bubble lasted 74 months (November 2001–December 2007)
• World War II lasted 81 months (September 1938–September 1945)
• Reaganomics lasted 93 months (November 1982–July 1990)
• Vietnam lasted 108 months (February 1961–December 1969)
• The Tech bubble lasted 122 months (March 1991–March 2001)
• Our current economic expansion which started in June of 2009, is currently 115 months long, the third longest in U.S. history.

Based on the current length of this expansion and the CEO Confidence Index, one might think we are looking at a slowdown in the economy sooner rather than later. We do not know exactly when, but a correction in the economy is coming. As I interact with owners of small to mid-market businesses I have noticed that they are feeling anxious over the uncertainty.

The good times can often make us complacent, so I suggest you embrace this uncertainty and choose to prepare now. Waiting to figure out what to do until the slowdown arrives is the wrong approach. I recommend you prepare for what is ahead by focusing on these five areas:

1. Leadership:Leadership is hard even in the best of times. In order to build a strong culture of the right people working effectively and efficiently, you need to be a strong leader. This requires clear communication on your part. Your employees will want to feel your confidence that the organization has a plan and can weather a downturn. It is important to open up the channels of communication to forestall speculation because what your employees do not know can hurt the organization. Knowledge prevents misinformation and disinformation.Communication and follow through increase trust; work on building trust throughout your organization.
2. Talent Management:Hiring and retaining talent is one of the major issues that business owners are facing today. As a business, you have to retain the good people you have and hire additional great people from a reduced talent pool. How do you do that? By developing a strong culture and providing a great work environment Employee development is key, and so is vision. Employees want to be a part of something bigger than themselves. Clarifying where the company is headed and the plan to get the business there, will not only help to retain your good employees but will also attract other good employees.
3. Customer Engagement:Business owners often wait for their customers to contact them, which is a mistake. Proactively develop the relationships with your customers—and do not wait for a slowdown to do so. The time to communicate with your customers is now, not when your business is struggling. Revenue growth is a proactive activity, meaning that if you want sales to improve, you have to be communicating more.
4. Focus on Improving Operations:How can you make your current operations more effective and efficient? During good times businesses tend to build more complexity into their systems and processes (if they even have systems and processes). You need to start thinking about how to streamline your operations, reduce waste, and get all of your employees contributing to the bottom line. How can you add value to the value stream in your business? How can you make all your processes and procedures more linear?
5. Manage the numbers:The numbers drive everything in your business; you need to know and understand them. You have to manage your cash flow and understand the key drivers of cash in your business. I run into far too many business owners who are not paying attention to their financials. Some review their P&L and balance sheet on a somewhat regular basis but few actually produce a cash flow statement to understand how cash is moving in and out of the business. Start to build cash reserves in your business now. Get to know your banker and start building the relationship now if you have not already done so.

An economic slowdown is coming. The question is when it will happen and how long it will last. The various aspects of your business are like links in a chain, and one weak link can make the entire chain weak. Now is the time to strengthen the links in your business chain to ensure you can manage your way through a downturn. Focus on these five areas to make significant improvements and be ready for when the economy slows down.

We are organizational development experts and we focus on helping small to mid-market companies strengthen all the links in their chains, reducing waste and adding more value to the value stream. This increases efficiency and effectiveness, improving bottom line results. Do not wait. Start preparing your business now. We can help. Give us a call: 503-312-3145

mailto:garyfurr@garyfurrconsulting.com

Books by Gary Furr Available on Amazon:

It’s Not Hard, It’s Business: 10 Keys to Revenue Growth

Make Your Banker Happy: 10 Keys to Unlocking a Good Relationship with Your Banker

References:

• Vistage Research, CEO Projections for 2019
• U.S. Bureau of Labor Statistics
• U.S. Bureau of Economic Analysis
• Internationalbanker.com
• Investopedia
• Patrick Bet-David: The Next Market Crash, YouTube November 2018

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A recent headline in the Wall Street Journal(March 23, 2019) read “One Fix for All That’s Wrong: Better Managers.” The report by author Sam Walker was based on research from the Gallup Organization. I read the article and was intrigued so I downloaded the Gallup research report and found that they had surveyed more than 195,600 U.S. employees in 2015 and 2016 and had more than 31 million respondents.

The research found that only one-third of those employees are engaged at work while 16 percent of the employees were actively disengaged or miserable in their jobs and tended to destroy what the most engaged employees built. The remaining 51 percent of employees were not engaged, meaning they were at work but not really contributing. The Gallup study suggests that if American companies were to simply double the number of engaged workers to two-thirds it would reverse the declining economy.

The Gallup poll found that the major factor for sustained excellence in performance was engagement and the belief by employees that they were doing meaningful work that supported personal growth. Quite simply, the employees of today want to have meaning and purpose. They want to be a part of something that is bigger than they are.

It is interesting to note that Gallup found in previous studies the order of priorities ranked family, having children, owning a home, and living in peace above having a job. In the most recent study Gallup found that having a rewarding job ranked first.

The research showed that managers have a 70 percent influence on what their teams achieved. If organizations are looking for superior performance, the manager has nearly three-fourths of the influence on ensuring this happens. However, only 20 percent of the employees reported that their performance is managed in such a way that motivates them to do outstanding work. This points out the need for organizations to have good managers who are actively coaching and guiding the employees in their charge.

Mr. Walker suggests that a shortage of jobs and inspiring bosses might explain why companies are struggling to recruit and retain millennials and could be the reason why the economy is growing so slowly. Gallup reports, “Organizations have nowhere to hide. They have to adapt to the needs of the modern workforce, or they will find themselves struggling to attract and keep great employees and therefore customers.”

The report says there is urgency for leaders to clarify and communicate their vision more clearly and rally employees around it. Only 22 percent of employees agree that their organization has a clear direction. Only 15 percent of employees feel that their leadership make them enthusiastic about the future, and only 13 percent feel that the leadership of their organization communicates effectively with the rest of the organization.

The survey illuminates the need for leaders and managers to have a clear direction, vision, and purpose for their organizations. Business as usual will not sustain growth or retain employees. The survey says that the one thing leaders and managers cannot do is nothing.

Gallup advises companies to seek out managers who infect their teams with a sense of purpose and function more like coaches than conventional top-down bosses.

Is your organization struggling to hire and retain talent? Are your managers coaching your employees to greatness or are they stuck in the traditional top-down management style? If these issues are affecting your performance, we can help. We are experts in business and helping organizations to make dramatic improvements in productivity and sustained growth. Give us a call: 503-312-3145

garyfurr@garyfurrconsulting.com

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When I was a teenager, my mother and stepfather got divorced and my mom and I moved to a mountain community and lived in a cabin that my aunt owned. We lived there while my mom ran a bakery that she had purchased with the proceeds from her divorce. The mountain cabin had no insulation, and the only heat source was a large floor heater on the first floor. On cold winter days I used to stand over the heater to get dressed because the house was so cold.

My mom worked very hard at the business she had purchased. I admired her hard work but I still don’t understand why she bought a business that she knew nothing about. She struggled every single day to make it work. She learned how to make bread and donuts from the baker who came with the bakery. I learned how to wash sheet pans.

My mom spent many late nights trying to figure out how to make money and pay her bills, and we had very little left over for us. I recall eating vegetable soup night after night, so much so that for many years after I grew up I would not eat vegetable soup. I think in those formative years I vowed not to be poor when I grew up. I have learned since then that business does not have to be so hard, but it can be very hard if we do not have the business skills beyond our technical skill set to make the business a success.

The tough years my mom experienced trying to make her business work, the pain she went through, the tears she cried, and then watching her eventually go broke convinced me there had to be a better way. It is what has driven me to succeed in my own career and also to take that experience along with my MBA in organizational development to help business owners understand and learn the business skills necessary to grow and sustain a successful business. It is one of the reasons I wrote the book It’s Not Hard, It’s Business.

I am not implying that your business will not be hard work, but it can be so much more enjoyable and easier if you will learn the skills necessary to ensure your success. You do not have to go it alone. Hire a mentor or a coach to assist and advise you and hold you accountable to a higher level. Then watch your business grow.

Give us a call. We are in the business of helping business owners grow and take their businesses to the next level. 503-312-3145

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Many business owners tell me they are making money, but they have no cash in their accounts to work with. Too often business owners look at the net income (profit) on the bottom of their P&L and think they are making money and have cash in their business. Reality says otherwise.

Remember that profit is simply the amount that your revenue exceeds your expenses; it is not cash but the theory of cash since your P&L does not take into account debt service, owner draws, or disbursements. Your interest payments on debt are accounted for on your P&L but not your principal payments. Here’s what it looks like in a formula:

REVENUE – EXPENSES = PROFIT

You cannot spend the theory of cash, and profits are not cash. It does not matter how much profit you make if the amount of cash you receive is less than or equal to what you are spending.

As mentioned in my last post, cash is not the king, it is the ace. You need it to grow your business. When you operate as if net income or profit is cash, you run into trouble. Always remember that profit is only the theory of cash.

If you would like to better understand how cash moves in and out of your business and how to improve top-line revenue and bottom-line profit, give us a call. We are experts in business. Your first hour is free. 503-312-3145

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