I am putting out this urgent message to all of my readers to warn them to prepare for a Double Dip Recession (See: What Caused the Great Recession?).

Yes, there are early indicators that a Double Dip recession is on the horizon.

While no official definition exists, generally speaking, a double dip recession is basically two back-to-back recessions separated by a brief period of economic growth (typically 6 – 18 months).

According to a wide range of economists, there’s a 25% – 50% chance that the recovery we think we’re currently experiencing is the brief “recession vacation” in the middle of a double dip recession.

There are two primary factors driving
a potential Double Dip Recession.

First, of the nearly $800 billion in stimulus money, half has already been spent. (See the home page of recovery.gov for an on-going tally)

The rest will likely be spent over the next year, with a disproportionate share of that spent before November 2010.

Why November?

Mid-term elections.

Numerous studies of voters show that putting money (in all its forms – benefits, jobs, tax refunds) into voters hands substantially increases the likelihood of voters re-electing whoever happens to be in office at the time of the financial windfall.

So the big question is when all the stimulus money money is gone (most likely sometime in next year), what happens then?

Who will be the big spender at that time?

Second, a substantial reason for the recent growth in business and consumer spending is back log. In 2009, most business severely cut back on everything — including raw materials, housing extra inventory, etc..

Early this year, these businesses were “too lean” and they had to replenish supplies once again. And since it looked like the worse was over, replenishment spending occurred in the first half of this year.

With most businesses done with their “catch up” spending, they will not shift into more of a maintenance spending in the second half of this year.

So why the urgent warning?

I urge you to not over commit your resources anticipating a recovery that can turn south very quickly.

FLEXIBILITY and ADAPTABILITY
remain two important mantras to live by.

A flexible cost structure, than can scale up to meet sudden surges in demand, and scale down to adjust to less demand is essential.

As a CEO coach, I have been urging all my clients to move the mix of fixed vs. variable costs to be towards variable cost.

Of the companies who have been hurt the most, a high fixed cost is one major commonality.

The second mantra is adaptability. For those of you who have heard me speak, you will remember my motto “Adapt or Die”.

Many people assume that the worst of our economic woes are behind us. This is not necessarily a good assumption to make!

In speaking with owners and CEOs of hundreds of companies across the US this year, the consistent anecdotal feedback I’m getting is that sales are up a little from their worst periods last year.

In short, 2010 stinks less than 2009.

The temptation is to breath a big sigh of relief, assume no more bad news can come (the worst is over… or is it?), and get sloppy.

Or

You can use this “breathing room” to ask yourself the hard questions.

• What did I learn about my market from the past 2 years?
• What mistakes did I make?
• Do I have a solid and strong business? 
  
• Where are my weaknesses? Where am I exposed?

The next 12 months is an ideal time to do some re-tooling in your company. If you need to make some substantial changes to weather (or heck even prosper in) future economic storms, now is the time to do them.

The urgency of the immediate crisis has waned. Sales, margins, and profits for many are up (though not always by a ton).

In short, a window of opportunity exists to re-position a business, shore up glaring weaknesses, move away from poor market opportunities and towards new ones.

Now is the ideal time to make major moves.

Yet, I see complacency setting in.

All those tough decisions can be avoided — replacing mediocre team members no longer seems urgent, getting new revenue streams from “market experiments” suddenly seems unimportant, driving business from new distribution channels can take a back seat to sticking with the status quo.

If you don’t force yourself to make the difficult choices now pro-actively, you will be forced into making those choice reactively.

One of the trademarks of my commentary and advice to others is I practice what I preach.

In the first 7 months of 2010, my own company’s sales and EBITDA have exceeded comparable metrics for all 12 months of 2009. (If you’d like to understand the process I used to accomplish this, get a FREE copy of my book The Recession Proof Business)

In short, 2010 has been a good year by every measure — yet you wouldn’t be able to tell based on my operating plans for the next 12 months.

These plans include:

• Overhauling my marketing with objectives of generating new business in 2011 from sources that generate none today
• Introducing new service offerings that over time will drive the vast majority of sales
• Adding staff in 3 countries
• Re-organizing team roles (including my own)
• Shifting of vendor agreements and selection to more variable based cost
• Re-evaluating and re-negotiating supplier contracts
• Delivering more than promised to clients
• Upgrading technology tools
• And more….

In short, I have maintained a “crisis mode” pace, a willingness to innovate / take risks, and a healthy sense of paranoia that perhaps I missed something…. all this despite having my best financial year ever.

I take nothing for granted, nor should you.

As my high school football coach used to say, you win championships by being mentally tough and exerting extra effort when everyone is tired, exhausted, and overwhelmed — it’s precisely when everyone else slows down that you gut it out and speed up.

An awful lot of people have eased up including your competitors. Now is the time to leapfrog ahead. If you don’t, someone will leap frog you.

Grow or Shrink because in this economy there isn’t much in the middle.

The choice is yours.

“President Barack Obama on Friday said he recognizes the economy isn’t growing fast enough, as a report showed job losses in June and a broad slowdown.

Nonfarm payrolls fell by 125,000 last month as 225,000 government workers hired for the 2010 census lost their temporary jobs, the Labor Department said Friday. Only 83,000 private-sector jobs were added last month, compared with economists’ expectations for 110,000.”

(Via Obama Says Economic Growth Is Too Slow – WSJ.com.)

My comments:

Lets deal with reality, job growth is nothing close to robust. As a result of the great recession (see: What Caused the Great Recession?), the U.S. economy has lost around 8 million jobs.

At the rate of adding 100,000 jobs a month, it will take 80 months (or 6.5 years to recover – which puts us into 2016). Assuming job growth leaps to 200,000 new jobs created each month and can sustain that pace, it will take over 3 years to recover jobs lost — putting full employment recovery in the year 2013.

Long story short, plan to operate your business our challenging economic conditions for the foreseeable future.

Welcome to the new normal.

The United States added just 83,000 private-sector jobs in June, a dishearteningly low number that could add to the growing number of economists who warn that the economic recovery has slowed to the point that it cannot generate enough job growth.

Department of Labor June Employment Report Over all, the nation lost 125,000 jobs, according to the monthly snapshot of the job market released by the Labor Department on Friday”

(Via NYTimes.com)

Victor’s Comments:

This recovery, which may be a bit of a misnomer, is going to take a while. The key takeaway here is to truly plan for an extended mediocre economy and make sure your business can do well despite the circumstances.

I was glancing at recent excerpts of Time magazines 100 most influential people in the world earlier today.

One of the people featured was the Canadian government’s lead banker (A Canadian version of Greenspan or Bernanke). He presided over an economy and banking system that has NOT required a single bailout.

Why?

He’s known as someone who focuses on the harsh realities while ignoring PR backlash for being honest.

According to him, the cause of the economic crisis was two fold:

1) Banks did not hold enough capital (or cash reserves) relative to the risks they were taking.

2) Western consumers spent too much money

I agree on both fronts and would add to the second point that Western consumers spent too much money that wasn’t actually their money (they borrowed it).

What’s his latest advice to the Canadian public?

Quit running up your credit cards and debts.

(So true!)

This is pretty brave stuff for someone who’s job is to boost the Canadian economy (which running up debts typically does… until you have to pay it back, but by then someone else is usually in office)

I found the idea of a government leader being willing to deal in the real world realities (not television sound bites) to be quite refreshing.

From a business stand point, those CEOs who thrive in this new economy are the ones that have brutally realistic understanding of their problems (and opportunities).

Here’s a link to the article if you’re interested in reading further: http://bit.ly/8Xr3Xh

The last month has been such a whirlwind of activity for me.

In addition to working with existing clients many of whom are having record sales years, I’ve been working with several new clients getting them ready for having a big year in 2010.

In addition, I’ve been doing the road warrior thing giving speeches across the country. I started a month ago in Baltimore, then moved on to Dallas, Las Vegas, Seattle, Boston, New York City and I’m off to San Diego in about an hour.

Business owners everywhere are concerned about the economy and how to do well in it. I suppose it’s good to be the “recession guy” in the middle of a recession. (There is a really big lesson in that last sentence if you read it very carefully a few times. Hint: I was NOT the recession guy BEFORE the recession.)

What has been interesting to me is to get feedback from business owners across many different cities in America.

In my speeches, I talk about the importance of finding the overlooking opportunity in your business that is growing despite the fact that it is being ignored and under-resourced.

When I mention this idea, the initial reaction is often “Ha! like I’d overlook that kind of gift.”

Towards the end of my talk, I often ask people in the room how many have some portion of their business (often it’s a small portion of the business) that is either growing or has not been negatively impact by the economy as much as other parts of the business.

For some businesses, it’s a particular product or service line. In other, it’s a particular customer segment that continues to buy despite the economy.

But what I have noticed is that in EVERY audience I speak to, about 10% – 15% of the businesses owners in the room, when prompted, acknowledge that this phenomenon happens to describe their business.

Then I ask the “killer” question… the one that “shames” people into action… I then ask, “Over the past 12 months, have you increased your personal focus, staffing, or funding to further develop this particular revenue stream?”

And 95% of the team the answer is a very sheepish, “No.”

The owner of a very successful business up in Seattle said it best, “Ya know, I’m almost ashamed to admit. But you know, we actually do have this one service that has been growing month-over-month for the past 15 months in a row.”

“It’s a service that I think is kind of lame. I personally find it annoying. But, when I think about it our customers must really like it because it continues to grow despite our best efforts to ignore it.

We originally offered it on whim, but customers keep buying each month. And ya know, we haven’t done anything with it at all. Geez… that’s just so embarassing.”

This is reaction is extremely common. Many very successful business owners overlook these growth areas because the growth does not match their mental model of their own business.

If they think they are in the business of selling “Product A,” they interpret any growth in Product B as an accident… and they’re slow to recognize it as an opportunity.

One of the reason I insist that all of my clients look at their dashboard numbers regularly and for making major strategic decisions is to use facts to blow away any assumptions they’re holding about the business.

The facts describe reality. What you choose to do with it is an entirely other matter.

For example, I also met a former General Motors executive who was probably one of the top 50 in all of GM. He described to me how GM would look at their monthly sales figures and compare them to Toyota regularly.

They noticed that monthly sales had shrunk steadily 240 months in a row (that’s every month for 20 years). During that same time, Toyota and Honda sales grew steadily 240 months in a row… in the exact opposite trend of GM.

How did other GM executives interpret these market facts?

They concluded that Toyota didn’t know how to make “real” cars. They didn’t know how to “push iron” like the folks in Detroit.

Geez 240 months in a row of declining sales for GM vs. 240 months in a row of increasing sales for Toyota. There is a message in dashboard metrics if one is willing to look at it objectively.

See the real problem was DENIAL. GM was unable to accept the brutally harsh reality that Toyota was doing something right–at least by customer’s standards. It never occurred to the executives at GM to deal with reality and to learn from it.

This is a mistake. Don’t let happen in your business.

Business metrics tell a story… if you care to look. If your business stinks, it stinks. Deal with it. But whatever you do, don’t just stick your head in the sand and deny it.

Similarly, if the runt of your product line is selling well… don’t deny and discount it’s successes. Often times, you will stumble upon doing something exactly right in your marketplace. When you do, it’s important to be smart enough to realize you just got lucky, and capitalize on it.

Of course, it helps a LOT to be deliberately experimenting with new ways of generating revenue. Lots of disciplined trial and error will eventually allow you to stumble upon an opportunity.

The trick is then to realize you just got lucky and to capitalize on it.

This is how you find growth in virtually any business. It’s the process I used with all of my clients to find ways to grow their businesses when their competitors are shrinking.

I was in Baltimore last week speaking to members of the CEO Club of Baltimore. I noticed several people in the room were have great sales and profits in 2009. Today’s video explains what these companies had in common and how they were successful in deciding to NOT participate in the Great Recession.

As many of you know, I’ve been doing a fair amount of research into the past 12 US recession going back 136 years–looking for what separated the winners from the losers.

One of the big secrets from this research is how winning companies profit from new trends that emerge in a recession.

The companies that grow in a recession RIDE a prevailing trend in their marketplace. The companies that lose are the ones that aren’t riding a trend, but being ridden by a trend.

Let me explain and you’ll see how profound this secret really is.

I recently met the owner of a sign company in Plano, TX. When a new retail store opens in his marketplace, his business manufactures, installs, and maintains the sign that goes above the store.

As you might suspect, the number of new retail stores opening has gone way down. Now, you would think this would be a problem for his business–and it has.

But, this very clever entrepreneur accidentally stumbled across two new opportunities that did not exist in the boom years. He has aggressively gone after these two new opportunities as a way to offset the lack of new retail stores opening.

What are these two opportunities?

1) He is doing a brisk business in selling “Going Out of Business Sale” signs. Brilliant!

Yup, if the trend is stores going out of business (instead of opening for business), you might as well RIDE THE TREND and help customers go out of business more profitably. The business coach in me finds this to be VERY clever.

2) The second opportunity occurs after a store has gone out of business. The landlord wants to get the space filled quickly, but the space looks like it’s still being occupied by the last tenant (who is now out of business). So this entrepreneur is doing a brisk business in “sign removal” services.

He’s already got the staff to do this, the worker’s comp insurance, the trucks, and the ladders.

This guy is profiting from this trend–while his competitors sit their and complain about it.

Listen.

Entrepreneurship is about solving problems for customers.

In a recession, there are simply no shortage of problems. What gets most people tripped up is that the type of problems and the priority placed on those problems has changed. In other words, the trend has CHANGED.

What customers care about most 2 years ago is not what they care about now. Most entrepreneurs recognize the first part of this phenomenon (e.g., customers no longer care about X).

What they don’t realize is that when a customer cares less about X (e.g. your product or service that is no longer selling so well), they replace that by now caring about Y (something different).

The secret to making wild profits in this economy is to be able to figure out what “Y” is for your customers and give it to them.

This is just one of the many lessons in my book The Recession-Proof Business. If you haven’t gotten a copy yet, you can get it for FREE at www.bailoutusa.com.

I received the following comment from reader David Oliver the other day. He made a really important point that I totally agree with.

“You know what I was thinking one day is how so many people need to develop their capacity to find the good/opportunity in situations. It’s really like developing a muscle. It takes practice, work and time.

People who don’t do well, always see the bad and the lack of opportunity (regardless of the economy).

People who do well, see the good and the opportunity.”

In the nearly 30 speeches I’ve given this year on profiting from this recession, there’s always a key moment where people in the audience get their “ah ha” moment.

This moment occurs when I help them notice the opportunities in their business that were “hiding” in plain sight.

Here is one example I use to make this point:

In an economy that is shrinking, where there are fewer customers who are spending less money, there is only ONE mathematically possible way to GROW your business. What is this approach?

Simple. Take business away from your competitors.

When you’re hungry, but the size of the pie is shrinking. You eat more by getting a bigger slice of the pie. It is the only way to grow in a shrinking economy.

Think about it. Most of your competitors have pulled back and are expecting to lose business. I say you don’t disappoint them!

They are doing less advertising, less marketing, and less selling.

They are cutting back on customer service to save money.

It costs less and less money to market your business as advertising rates have dropped like a rock. Your competitor’s best customers that used to be impossible to lure away, are getting more dissatisfied with each passing month (e.g,, who has been really happy with their stock broker the past 12 months?)

This make is a lot easier to “steal” your competitor’s best customers.

Sometimes it takes a business coach to point out the obvious that everyone seems to be overlooking.

Yet if you talk to most entrepreneurs and their salespeople, they spend all their time focusing on the severity of the recession — and virtually no time on finding and exploiting their competitor’s weaknesses.

They are ignoring this opportunity that is sitting in front of them “hiding” in plain sight.

My question to you is are you doing the same?

In a given week, how much time do spend thinking about how bad the economy is?

How much time do you spend on researching what customers want right now and what your competitors aren’t doing right?

The money in this economy is not being made by watching CNN.

It is being made by getting closer to the customer in your marketplace and figuring out how to crush your competitors.

I received the following comment from reader David Oliver the other day. He made a really important point that I totally agree with.

“You know what I was thinking one day is how so many people need to develop their capacity to find the good/opportunity in situations. It’s really like developing a muscle. It takes practice, work and time.

People who don’t do well, always see the bad and the lack of opportunity (regardless of the economy).

People who do well, see the good and the opportunity.”

In the nearly 30 speeches I’ve given this year on profiting from this recession, there’s always a key moment where people in the audience get their “ah ha” moment.

This moment occurs when I help them notice the opportunities in their business that were “hiding” in plain sight.

Here is one example I use to make this point:

In an economy that is shrinking, where there are fewer customers who are spending less money, there is only ONE mathematically possible way to GROW your business. What is this approach?

Simple. Take business away from your competitors.

When you’re hungry, but the size of the pie is shrinking. You eat more by getting a bigger slice of the pie. It is the only way to grow in a shrinking economy.

Think about it. Most of your competitors have pulled back and are expecting to lose business. I say you don’t disappoint them!

They are doing less advertising, less marketing, and less selling.

They are cutting back on customer service to save money.

It costs less and less money to market your business as advertising rates have dropped like a rock.

Your competitor’s best customers that used to be impossible to lure away, are getting more dissatisfied with each passing month (e.g,, who has been really happy with their stock broker the past 12 months?)

This make is a lot easier to “steal” your competitor’s best customers.

Yet if you talk to most entrepreneurs and their salespeople, they spend all their time focusing on the severity of the recession — and virtually no time on finding and exploiting their competitor’s weaknesses.

They are ignoring this opportunity that is sitting in front of them “hiding” in plain sight.

My question to you is are you doing the same?

In a given week, how much time do spend thinking about how bad the economy is?

How much time do you spend on researching what customers want right now and what your competitors aren’t doing right?

The money in this economy is not being made by watching CNN.

It is being made by getting closer to the customer in your marketplace and figuring out how to crush your competitors.