So I was checking to see what blog posts have been read lately, and up pops an old one.
April 16, 2008.
Basically, it was the moment I decided for myself, once and for all, that we were falling into a deep recession and it was going to get a lot worse. It was the moment I made the harsh decisions to prepare for the worse.
Interestingly, almost no one thought it would be as bad as I did. Even the infamous Bilbobuster was talking of a two year time frame.
I thought it would be a minimum of 5 years, and possibly 7 years before we would recover and that it would never be quite as booming as it was before the crash.
I had one interesting comment from someone back then, that is reflective of the thinking at the time.
"I think your sky-is-falling attitude is both overly pessimistic and
inaccurate. From what I can see Bend is doing very well. Within a block
of my house two homes are being built and another is being remodeled.
The stores I shop at are busier this Spring than I've ever seen them.
Traffic today, a mid-week weekday, was more congested than on a summer
weekend. Where I work we're overwhelmed with business. Bend is booming
and prospects are good."
Funny thing is -- I was actually soft-pedaling what I really thought. I thought sales could drop as much as 50%, based on previous experience with bubbles. Fortunately, it never dropped more than about 15% in one year, which was a manageable decline -- I could adjust my orders and costs according. I worked the store alone that year, so basically I wasn't any worse off than the year before.
Overall, my sales dropped 28% from 2007 to 2010.
The store has recovered in the last couple of years, though I'm still about 10% down from the peak. On the other hand, my profit margins are better, so the store is in good shape.
But back then, like I said, I wondered if a 50% drop was possible. I could survive a 50% drop, because that's the way I designed my business. But I can guess that very, very few businesses can survive that much.
So it dropped about half as much as I feared, and it took 3 or 4 years to do so and it turned out to be manageable. In fact, I'd have to say that I barely felt it, beyond the fear it engendered that it could get worse.
The lesson I think is to prepare for the worst. Then when it doesn't happen, you're ahead.
2 days ago