Jeff Ackerman: Growth is the least of our concerns
If what I’ve been hearing is accurate – and it’s coming from too many sources not to be – growth will be the least of our worries by November’s election.
I have (and will continue to between now and November) told you that this “managed growth” initiative proposed for Grass Valley is a bad idea, mostly because it’s not needed and will only worsen an already-bleak economic outlook. In fact, there are signs that we are in the midst of a recession that some predict has a 20 percent chance of turning into a full-blown Depression, the likes of which we haven’t seen in almost 80 years.
A couple of weeks ago I attended an economic summit at the Hyatt in Sacramento. Economist Alan Beaulieu from the Institute for Trend Research was the keynote speaker and his program was titled “A Thousand Ideas For Success In An Economic Downturn.” As you can imagine, a no-growth initiative to address an annual population increase of less than 1 percent was not one of the ideas.
According to Beaulieu, the housing market will continue its painful plummet. High energy prices and rising interest rates will continue to eat away at discretionary income, and next year Congress may undo tax cuts provided under the Bush administration, essentially amounting to a new tax that will further reduce consumer spending. “Right now it’s like there’s pressure building in a steam pipe,” he warns, “but the pressure is not enough to cause a rupture.”
He sees the “rupture” happening in 2009 and lasting through much of 2010.
As you can imagine, I lost my appetite midway through his talk.
Unfortunately, Nevada County’s economic base is comprised of mostly “mom and pop” businesses. An estimated 74 percent of our businesses have fewer than four employees. Many of them are already feeling the pinch. More and more empty storefronts are showing up in downtown Nevada City and Grass Valley. And there are whispers that many more are on the verge of shutting down. It doesn’t take much to push a small business – with often-slim margins – over the edge. Those of you who have lived here most of your lives probably recall similar circumstances. When the last mine shut down in the 1950s, our downtowns were virtually ghost towns.
Okay… so what should we do about it? That’s a great question. For starters we need to get real serious about this “shop local” notion. And not just so we can drive local sales taxes, help sustain employment and support your friends and neighbors who are, in fact, these moms and pops who run businesses here. Gasoline costs are so high it makes no sense to drive to Roseville, or Marysville, or Sacramento to shop for anything. Just do the math.
Businesses, then, need to focus every ounce of their energy on their customers. When money gets tight, customers will always choose the best value and most desirable experience over pure loyalty. If your product or service offers that, they’ll buy from you. If it doesn’t, they’ll buy from your competitor (even if he or she is located in Roseville, or Marysville). We all have our terrible customer service stories to tell and we simply cannot tolerate poor customer service, especially during a down economy. “In a slowdown, it’s even more important to make sure customers love doing business with you,” one California manufacturer recently advised.
Marketing is also critical, even in a down economy. The smart business person knows that this economy of ours is like a rollercoaster and what goes down eventually climbs back up. The best way to ensure you come out of a downturn in better shape than your competitors is to increase your marketing while your competitors cut back.
In fact, Beaulieu says there is still a lot of money to be made, even in a down economy. “Buying up inexpensive real estate when everyone else is selling might seem counterintuitive,” he says. “But if you’ve handled your cash and debt responsibly and better understand how slower economies can be advantageous, you will emerge as a better business leader.”
Beaulieu says recessions are part of a natural cycle, kind of like forest fires that keep the forests healthy by clearing dead wood and laying the groundwork for future growth. The key, of course, is to make sure you aren’t the dead wood.
There are also some great business opportunities to be had, even in a down economy. Business areas that will be unaffected by the downturn, according to Beaulieu, include energy, travel, “green,” health care, leisure and pets. I’d guess bars would be right up there, since many would just as soon use their last dollar for a cold beer.
The other good news is that we are a resilient bunch. I think we’d all agree that we’ve had a pretty darned good ride for a long time now and that this downturn had to happen sometime. The test will be in our resolve. To that end we need to be resolved to get through this together; neighbor helping neighbor, business helping business. We really can be that “sustainable community” lots of folks like to talk about. We have everything we need right in our own backyards. The next 18 months will simply be a test of our resolve and my hope is that we’ll step up and meet the challenges head-on.
Jeff Ackerman is the publisher of The Union. His column appears on Tuesdays. Contact him at 477-4299, firstname.lastname@example.org, or 464 Sutton Way, Grass Valley 95945.
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