Wednesday, November 17, 2010

Understanding Cycles

"To every thing there is a season, and a time to every purpose under the heaven."
- Ecclesiastes 3:1
In life, just like in business, there are cycles. Understanding where we stand in those cycles is critical to success.

Bradley Sugars makes an excellent analogy realting the natural seasons to business cycles. Winter, Spring, Summer and Fall all have their business parallels. If we undertand where we are in the cycle we can prepare accordingly and grow.

We just left Economic Winter. The Great Recession has done a good job of purging the business landscape of many of those lingering ccompanies that were just holding on. It also brought low several giants who through hubris and poor planning were caught in the storm.

That means we are in Economic Spring. Now is the time to plant seeds and grow. Not everyone will reap a fruitful harvest but those who understand how the world has changed will do very well. And for those who don't believe we are in the Spring, how else do you explain GM's profits? Winter is over -- act accordingly.

Economic Summer is the good time. That's when money flows freely and everyone is spending happily. This is the time to raise your prices and squeeze as hard as you can. But it is also the time to start building your Winter stores. Like good little squirrels, we need to put away nuts for the dark times that are coming. Don't be one of those fools that believes the Summer will never end.

Economic Fall is the tricky one. This can be hard to see coming simply because the signs aren't always so clear. The point is that this is when you will need to start hunkering down and adapting your business for lower revenues and harder times. You'll be glad you did.

Booms and busts are nothing to fear. They are natural cycles in the economy. If you prepare for them and are realistic, you will weather them well and come out on top when Spring returns.








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