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Monday, April 30, 2007

The short and long cycles

If you check back to the beginning of this blog, you'll know that the entries here started at a crucial time -- an inflection; a turning point, the end of a long and arduous two-year business slump where all my assumptions and expectations for the enterprise crashed around me (as did our sales, employee base, and, I thought, our market position.)

Now, in the bright light of Spring, I see a very different picture. The problems we had were not what they seemed to be; even in the worst days, our true circumstances were really quite healthy. I can track a specific story, with twists and turns that boggle my mind and stretch the bounds of probability. This story is too close to current circumstances and relationships to relate openly in this blog but I certainly didn't expect the results we see today -- both in the acceptance of our business and our actual sales revenues -- from when things began turning really bad a couple of years ago.

I realize now, more than ever, that businesses go through short and long cycles. Short cycles are the daily or even monthly ups and downs, you can look forward and even plan for them. Long cycles are more interesting and challenging. You may think you are in a certain place within the cycle; the real picture may be very different. Think of 'technical analysis' from the stock market perspective -- pundits read the charts, looking for signals and indicators, and often they are right -- but it is harder by far to read a long cycle shift than a short cycle.

I'm fortunate, as well, that as things stopped working the way they should, I remembered the basic rules of business in hard times.

  • Never let your debt get above the level where you can repay it (or, in certain circumstances, be exempt from having to repay it.)
  • Always accept full and complete responsibility for your business problems; yes, the economy may be bad, you may have bad employees, technological change or competitors may be decimating your market -- but ultimately you are responsible for your business;
  • The 'reality principal' applies in both hard and good times. "Things are never as bad as they seem at their worst, and they are never as good as they seem at their best." Of course there is nothing wrong with striving for things to be good, and to be the best at what you do. But it is wise to be well grounded in good times, and not overly pessimistic in bad circumstances.
Right now, nevertheless, I'm savouring the pleasures of a good cycle, and I know in my heart that it will be a long one. But I'll retain my humility. You deserve and have the opportunity to succeed and enjoy your life and accomplishments, and your success and achievements are far more important than mine in the truly big picture.

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