After you've been beat up in business for awhile, you start to see things in cycles. Products don't really cycle as much as the average consumer thinks: sometimes a hot product will get a second wind, which is almost never as strong as the first time, but most of the time the cycle, if there is one, is longer than the life of any one store. Products can mutate, or change, and a sub-element can become hot for awhile, but mostly you get that one chance, and then a second chance, and then its pretty much over. The product fades into the woodwork, there but not really significant.

Industries, on the other hand, have cycles that are relevant to my business. Games, for instance, have had several surges and relapses in the history of my store, and so have comics.

Then there are the internal cycles of a store. Are you expanding? Adding product lines? Consolidating? Cutting back? Trying to grow sales? Or trying to grow profits?

And there are the overall macro economic cycles, which I divide into the local economy and the national economy.

Of one thing you can be absolutely sure. There WILL BE a downcycle in the economy at some point. Whether a recession is on the horizon or not (and I think it is) you can be sure that a recession is coming at some point. You can take that to the bank.

The thing I have learned through hard experience is that it is important to get ahead of the curve. If you only react after it happens, you'll always be behind. You'll cut your bills and expenses too slowly, always a little too late.

On the other hand, you don't want to be a ninny and respond to every little downtick.

I have a rule of thumb for my business; three consecutive months of increase is a go ahead sign, and three consecutive months of downturn are a cutting sign.

I've had my three months of downturn. In fact, I broke my own rule and starting moderating after the second month, because I could see that the internal dynamics of my store were in a downturn: and the two main industries I'm involved in, games and comics, are in a bit of a downturn; and Bend looks to be in a downturn; and the national economy is in danger of a recession. Four down signals, all at once.

In fact, I'm surprised that everyone else isn't seeing the same thing. It doesn't really matter to me. I'm doing what I know is best for my business. I've got all four of my warning signs flashing, so I'll go ahead and moderate now, instead of waiting.

I don't think this is a overreaction. In fact, despite my skepticism about the housing prices around here, I was fairly bullish on business until this spring. I thought it would stay strong through the end of the year.

Instead, I think business will be good enough through the end of the year, but I'm betting on a downcycle after the holidays.

Downcycles aren't really all that bad, if you're prepared. It's like a horrible winter day that gives you an excuse to stay home and sit by the fire. You just kind of hunker down, and watch the wreckage around you, and hope the damage doesn't reach you.