Just as the weather has a big influence on how our gardens perform, the economy has a large impact on how well our businesses are doing.
The good news is that signs of spring are here. Unemployment, although still high, is showing signs of a downward trend. This is good news because of the multiplier effect, which means that every dollar that is earned in payroll will circulate more than once in the economy. One simple act of purchasing causes increased economic activity all the way down the supply chain.
The multiplier effect can also cause the snowball (rolling downhill) effect, which means that as more money circulates, businesses will have to create new employment, eventually leading to economic recovery.
Sales of existing homes are rising as well, which will eventually work off the excess inventory and lead to a stabilization and ultimately a recovery of home prices. That is also good news because the majority of consumers’ equity is in their home value. As that value stabilizes, so will consumer confidence; when that rises, consumer net worth will increase. Consumers will become more willing to increase both discretionary spending and purchases of capital items, and the overall economy will strengthen further.
Along with increasing temperatures in the summer, there are a number of festivals and events that draw locals out of their homes and attract both in-state and out-of-state tourists. Every dollar spent will boost the economy. Even the dollar spent on cotton candy or popcorn will contribute.
But just as good weather alone will not make gardens grow, neither will good economic news grow your business. If you want to profit from the improving economy you must follow the same basic rules that apply to gardening. These are:
Plant the right crop.For gardeners, the crop must be fit for the climate and for the soil. In business, the product and service mix must be fit for the demographics of the area. Market shifts caused by external factors will affect what types of businesses will prosper.
Water and fertilize as needed.Seeds will not propagate unless gardeners water and fertilize them, and leads will not turn into sales without follow-up and good customer service. Also remember that advertising and consumer incentives work like fertilizer to increase sales.
Remove weeds and control pests. Weeds will try to creep into a garden and draw off the fertilizer and water, and pests will try to eat your crop before you can harvest it. Gardeners pluck weeds at their first sign, and use everything from fences to scarecrows to keep pests away. In business, the weed might be the person trying to put his or her hand into the till. Good internal controls such as accounting systems, processes and security, will prevent those occurrences.
Rotate your crops at least annually. Just as the soil becomes tired and needs re-nourishment, so does the consumer market. Keep things fresh and exciting for consumers to increase the potential of them returning. Large businesses like auto manufacturers, clothing companies, furniture manufacturers and restaurant chains change their offerings periodically, so should you as a small business owner. You can introduce new products or services periodically, or offer some items on a time-limited basis.