What to do about the R-word?

About six months from now the government will come out and tell us we have been in a recession.  It always works that way, because the numbers lag.  Keep in mind that recessions are uneven in their impact.  I will grant you that a recession caused by some idiots in our financial industry can be farther reaching then just a down-turn in aircraft sales.  Still, I know that China and Canada are still buying big mining equipment from manufacturers in my city.

As a small business person you may not be immune to recession, but you may not suffer much from it either.  Know your local business community.  If your local economy is heavily dependent on the financial industry and they are laying off lots of people or cutting bonuses then you have a problem.  If the businesses around you are heavy exporters then your situation may be stable.

Other areas to understand are the situations of your suppliers and customers.  AT&T is replacing a very large number of lithium batteries because of explosions.  Unfortunately, their Canadian supplier went belly up, so they have to cover the cost.  Fortunately, there are alternate suppliers.  What if there weren’t?  What if you were in that situation?  Suddenly your suppliers problems can hurt you badly.

Banks and other lenders are your suppliers of capital.  How is you bank doing?  How do they feel about lending to you?  You need to know the answer to those questions.