Before The Cold Sets In (Issue 540)

In which we are reminded to engage our clients on what’s top of mind for them right now rather than on what’s top of mind for us.

I live near Boston, Massachusetts.  The Red Sox are finished.  Winter is coming.  Around the Miller household, we are preparing our house and garden for the winter.  Storm windows hung up, hosta cut down, lime and fertilizer spread around. Early days, still, and we’re working our way through the list, week by week, toward the inevitable arrival of sharply colder temperatures and snow.

As a business owner, I’m feeling like I’m in the same position now – another economic winter is coming, and I need to prepare.

The news coming out of the Eurozone ranges from “not encouraging” on a good day to “frightening” on other days.  U.S. and foreign stock market heaves and rolls leave me sea sick as my investment values bounce up and down, almost carelessly. The political and regulatory environment in this country leaves me shaking my head.  Our clients’ outlooks for 2012 range from guarded optimism to bracing for a crash.

Like many business owners, I am on the phone almost daily with clients and friends asking, “what’s your view of this, what are you seeing?”

And while I have nurtured my optimism through the economic winter we’ve experienced for the past two years, I am facing several significant decisions which, if made wrong, would sting sharply. What to do?

What to do with my personal investments?  The money I saved for tuition or my  personal rainy day fund?

What to do about hiring additional people?  What to do about investing in R&D and development of new capabilities?  What to do about investing in marketing and communications initiatives for next year? What to do about our monthly expenses?

And, while I know that “we who invest through the dark winter” will be best prepared for the following bright spring, how much cash cushion do I put aside in case (to continue the metaphor) we lose power for a bit in the heavy winter snows?  And, if this economic winter lasts another 12 – 18 months rather than six months, what then?

So, let’s say you were my CPA.  I’m guessing, if you were anything more than a bean counter and tax filer, you’d be asking me those questions.  You couldn’t possibly know my answers because, after all, they’d be my answers.

But with no products or services to sell at this point, you’d be helping me just by asking the questions –  inviting me to consider how cold and snowy the economic winter could be, to look again to ensure I’m prepared with enough fuel and food.  For example:

  • What is your outlook for the economy?
  • What do you think that will mean for your sales?  Your expenses?  Your profitability?
  • How much of your 2012 business is locked in at this point?  How much do you have to find?
  • If your 2012 sales were 10% lower than you expected, what would you do?
  • How about if your sales were 40% lower than you’d expected?
  • What is your rock bottom break-even point?
  • What investments could you make now to raise your odds of success if the economy double dips recession?
  • How could you make your expenses more variable and flexible?
  • How many months expenses do you have in your business  reserve fund? Your personal reserve fund?  You do HAVE a reserve fund, don’t you?
  • What sorts of personal or business expenses could you defer, or start deferring now, to build up additional reserves?
  • What will be the impact on your business if you defer some of those investments or make some of those adjustments?

And, you might want to come to that conversation with some perspective to share:

  • Your view or your company’s view of the events in Europe and in the US.
  • Steps you are seeing other business owners taking at this point.
  • Your view about prudent personal and business reserves now… and why you think those levels appropriate.
  • Your thoughts about experts inside or outside your company who could be good resources at this point, for example, to talk about your clients’ mix of investments, to redo their financial plans.

And whether our clients will be embracing the economic winter in New England, New Mexico, or New Zealand, our clients are asking themselves these questions… or they should be… and we should asking them, too, right now, before the cold sets in.


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