Ready...Set...Wait? Leading Indicators and Small Business

The following was written by my good friend John Dini in San Antonio. I couldn't resist re-posting.

In the last few weeks I've talked to a score of small business owners who say that things are improving for their companies. Several have been involved in trade shows that had record attendance. A few manufacturers are seeing a strong uptick in orders. Retailers are experiencing increased traffic.

We all know that the businesses who are positioned to move early in a growing market get the jump on those who aren't, but how do you know whether this is the time to move? Most entrepreneurs behave like "retail" or individual investors in the stock market. They are too late into a bull market to capture most of the profitability, and too slow to get out in a down slide to avoid most of the losses.

The stock market professionals say that when huge volumes of retail money (from IRAs, 401Ks and other self-directed sources) begin pouring in, the rally is probably over. What worries me is that in the last 60 days I've met 5 people who told me they "didn't need the income" from their job or business, because trading their personal portfolio was making them enough money to live on. They have apparently forgotten 2000. I know several successful individuals who would have retired years ago if they hadn't been suckered into the tech bubble right at the end.

So do you start looking at expansion of your small business now, or wait until you are completely certain, and probably miss the bulk of the opportunity? How do you know when it is the right time to bet on the economy?

The first rule is to stop reading the newspaper, and turn off the financial news stations. For the vast majority of small business owners, what happens in "the economy" means nothing compared to what happens in your local market.

I have a client who owns a machine shop. Nationwide there is clearly a surplus of manufacturing employees. In our local market, a new plant by a big publicly traded corporation has begun recruiting. It doesn't matter to my client whether manufacturing unemployment nationally is 10% or 13% or 20%. Locally, there aren't any skilled employees available. Would this be a smart time for him to cut wages or benefits? Of course not. Regardless of the national situation, he is in a dog fight for good workers.

Business owners need local measurements of what is happening in their industry. These are typically not published anywhere. You need to develop and track your own. Establish relationships with other business owners who are "upstream" of you in the food chain. They may not be a precise predictor, but they can give you a better idea of whether an uptick in business is an anomaly or a trend.

For example, a subcontractor to residential subdivision builders maintains a relationship with a civil engineering firm that serves the same market. While his contracts for home construction vary according to monthly sales, when the civil engineer starts platting whole new subdivisions the trend is longer term. The civil engineer talks to the real estate agents who represent large parcels. He wants to know when the residential developers are negotiating for new tracts of land. It doesn't matter much to either of them what the national numbers are. They don't do business nationally.

A fast-service restaurateur of light (frankly- hip) food follows approval of financing for new apartment complexes. An office furniture dealer tracks leasing rates. A pest control company tracks the backlog in residential sales. A cash register dealer tracks announcements of new retail centers.

Most small businesses thrive according to the skills of the owner. If you have 1% market share, you can grow to 2% market share and do well even in a shrinking market. Leading indicators can tell you when it is time to focus on taking existing business from competitors, and when it is time to put your efforts towards chasing new business.

Inspiring a Shared Vision

Regardless of the economic times, leaders need to inspire a shared vision - for their key stakeholders - employees, customers, partners and potentially the communities where you live and work.

Visions don't hvae to be grand designs in order to motivate and inspire people. A vision pulls people forward. It projects a clear image of a possible future. It generates the enthusiasm and energy to strive toward that goal.

• Martin Luther King, Jr.'s vision had the power to better the lives of us all and to change the course of our nation.
  
  
• Winston Churchill's vision had the power to pull the British people through the darkest days of World War II when they fought Hitler alone.

All inspiring visions offer the following attributes:

• Ideal - a high standard to aspire to
• Unique - pride in being different, an identity
• Image - a concept or mental picture made real or tangible through descriptive language
• Future Oriented - a map of the journey and statement of the goal ahead
• Common Purpose - a way people can join together

In order to inspire and motivate, a vision must be communicated in a clear and lively form. It myst be expressed in a simple and direct way that moves and touches people. Leaders breathe life into their visions and values by using things such as metaphors, examples, quotations, analogies, slogans and anecdotes.

When leaders effectively communicate avision, it has very powerful results. When visions are effectively communicated you will see -

• Job satisfaction
• Commitment and loyalty
• Clarity about organizational values
• Pride in hte organization
• Organizational productivity

Is your vision inspiring your team?