No matter what anyone else says.

I had a customer ask me how the store was doing. I waggled my eyebrows and laughed.

"Well, you know with the encouragement of the stock market, well, you know...."

Actually though, I don't expect the stock market plunge to have an immediate effect on sales. It doesn't work that way. It will take a sustained drop before people start changing behavior.

Besides, it's summer. If I'm going to have good sales, it is in the summer.

I'm almost positive we'll beat last year in August; just as we beat last July by about 10%.

That sounds good, right? But when I look at last year with cold, calculating eyes -- instead of casually averting my eyes like I have for most of the year (because an actual upturn gives me the courage) I can see how utterly dismal last summer was.

Here's how the sales have gone since the great recession started. One full down year after Lehman Brother's collapse, then as we cycled a year back over that awful September, I had seven up months, then last April, another decline of 14 months, until this summer when we've been handily beating last year. I think this is likely to continue into the fall.

What we are doing, here, is bouncing off the bottoms of previous cycles. (Dead Cat Bounces.) For instance, when we had that expected unexpected drop in April and May, I had to start cutting costs which then impacted on June, July, and Aug. and now I'm cycling a year after that and easily beating the dismal summer.

If it was the stock market, it would be called a "bear market rally."

As I've mentioned before, the only statistic that really matters is my break-even point. If I take my fixed expenses (including what I pay myself) and divide that amount by my average profit margin, I have to make (X) amount of money to break even.

I prepared for the Great Recession by pushing my sales as high as I could, increasing my margins as best I could, and keeping my fixed expenses as low as I could. When the downturn started, I could give away a little more than half of my sales and still be above the break-even point.

It's never gotten close to that bad, fortunately.

I doubt there are very many small businesses that can sustain a 50% drop, few that can handle a 40% drop, most probably can't handle a 30% drop without help, a 20% would be painful for most, and a 10% might be enough to actually destroy an unprepared (overly indebted or high fixed expenses or low margins or barely good enough sales.)

All these shocks do is remind me to keep watching my P & Q's and not expect any real change to the economy for years to come.

No matter what anyone else says.