I'm not that good a prognosticator to know if this is in fact what will happen. However, I think that it is a good bet that the conditions in the US for the next few years will be one where everyone has to do less (see explanation in last installment). So how does one adjust.
I'm not going to give the lecture about cutting your costs/spending less, etc. You can read that anywhere. What I want to talk about is opportunity. Yes, opportunity. Because whenever there is significant change there is opportunity - winners and losers. Take automotive for example. The ability to sell lots of very reliable vehicles with easy financing has made winners of auto dealerships and losers of auto repair businesses over the last 10 years. When you take easy credit out of the system and people don't have the income to afford to buy a car what's going to happen. They are going to run their cars longer and they will need more repairs. I think the opportunity is going to be in the repair business.
Looking at this further, the new car sales business has other disadvantages in the new economy. It is based on lots and lots of borrowed money...borrowings for that big lot, showroom and repair facility, borrowings for all that inventory, and borrowings for the purchasers. Not a very good model for an economy that is de-leveraging and in recession. On the other hand your typical independent auto repair shop is a pretty low overhead operation and uses very little leverage.
Whether you are in business, and independent worker or an employee, I would urge you to look at what you are doing and where you are working and say this to yourself...
- How dependent is this business on borrowed money?
- How dependent is it on having to sell lot's of stuff?
- How high is it's overhead?
So I'd like my 6 or so loyal readers to do me a favor. I want you to think about all the kinds of businesses and economic activities you know, and to the best of your knowledge predict one or two that you think can actually benefit from the new de-leveraging/recessionary environment.
And remember what my new motto is for the coming years - How do we do more, deliver more, achieve more by using less and less.
In my next segment I will be addressing what you can do on a personal level to cope with a crisis such as a lost job or a business going down the tubes.