Five lessons learned from a painful 2009
Rejoice! It's over. The year 2009 is behind us. You'd be hard-pressed to find a business executive who isn't thankful for that. There were few safe harbors from the economic storm that lashed the country last year —it seems every business, every employee, every part of the U.S. economic machine felt its share of the pain.
The good news is that 2010 appears to be starting off on a brighter note. The word from independent market analysts, December government reports, and you, the readers of DC Velocity, is that the economy will grow —albeit slowly —in 2010 and 2011. (See "Survey: DCs shift to recovery mode.") There's even a chance we could see a moderately robust recovery —if job growth picks up, if the housing and construction sectors bounce back quickly, and if we can avoid the inflationary perils that so often lead to a stutter-step recovery.
As we look ahead to the new year, it's a good time to reflect on some of the lessons learned during 2009 so we can avoid repeating these mistakes as our economy stabilizes.
First, don't spend beyond your means. In hindsight, we can all see what we should have collectively known but ended up learning the hard way. When it comes to managing a business, your personal finances, or even a government, overextending yourself is an invitation to catastrophe. If you can't afford something, do without. Don't borrow.
Second, keep the government out of the economy. Although the causes of the economic meltdown remain open to debate (even here amongst the editorial staffers at DC Velocity), it's clear that bad mortgages played a significant role. The politicians blame the bankers for lax lending practices, while the bankers point the finger at politicians who eased lending standards back in the 1990s. Whatever your view, it's likely we can all agree on one thing: When the government decides to step in and "fix" matters, things eventually, and invariably, go horribly wrong.
Third, while it may not always be easy to be green, it's a mistake not to try. Many companies used the economic downturn as an excuse to halt, or at least back off from, their corporate green initiatives. This is a mistake. The evidence on sustainability programs is in: Green business practices reduce waste, and thus, reduce costs, and thus, improve your bottom line. Commit now to making green a priority for your operation in the new year.
Fourth, it is important to remain vigilant for attempts at reregulation by a government that ignores history. It's common when times are tough for ordinary citizens (and the governments that work for them) to overreact. The unbridled stimulus spending that didn't really kick in until after the economy had started recovering on its own is but the most obvious example. Governments also have a tendency to overreact when it comes to regulating (or reregulating) industries. This could become a dangerous and lasting legacy of the recession of 2009, and it's a threat businesses should watch out for and fight with every means at their disposal.
Fifth and finally, remember, there is always opportunity, even in the worst of times. In the face of the recessionary storm, some companies cut costs so aggressively that they've deprived themselves of the resources they'll need to rev up for recovery. Others failed to grasp the gravity of the situation and now find themselves awash in red ink. Then there are those who maintained their balance, walking that fine line between surviving the downturn and making only those cuts that were absolutely necessary. Needless to say, these are the companies that will be ready to burst out of the gate and exploit the opportunities that a rebounding economy will no doubt present.
