GROWING BUSINESS: Optimism fuels change where gloom was king

A FRIEND popped in for a beer a couple of weekends ago and informed me gloomily that there was no doubt that every business out there was doing badly.
He owns a small import wholesale distribution business with gift shops being his main buyers. He has struggled on through the downturn supplying the toughest sector there is - retailers to the discretionary spend consumer.
He was convinced that there were no exceptions - everyone was struggling. While agreeing a lot of businesses were having a hard time, I pointed out that many exporters were booming and I personally knew plenty of expanding enterprises. But, nope, he was adamant, the whole economy was in decline.
I bumped into him at the movies two weeks later and asked how it was going.
"Perfect," he replied, "We've just received a big order from Farmers and it's enough to keep us going to the end of the year."
Of course I was delighted but couldn't resist asking how he thought the economy was. Without a hint of irony, he replied: "Oh, it's definitely turned the corner. People are feeling more optimistic now."
He didn't see that his view of other people's experience was wholly influenced by what happened to him. In two weeks, his whole world had shifted.
And that's the trouble with economic downturns; as conditions get tougher, people look more inward, and everything becomes personal.
There is a feeling out there that this is a W-shaped economic downturn and that business sentiment is back down where it was in about mid-to-late winter last year.
Boy, the doom and gloom was certainly heavy at that point. Then it seemed to pick up in early summer, and then drifted downwards again, although interestingly the surveys showed the medium-term confidence was high.
The chamber's business confidence survey is out with businesses now and it will be interesting to assess the results.
There is a difference between now and this time last year. Twelve months ago, we all felt we were in the same boat. Now the local economy is described well as "patchy", which means that some businesses are doing a lot better than surviving, and some are not.
Quite often it's the ones that made early changes to their business model that are ticking along acceptably now. Many professional practices such as accountants and lawyers downsized their administration staff by 10-20 per cent, and restored their profitability, even if the partners sometimes now have to empty the bins.
Another characteristic of the current situation is that many businesses are reporting that there is less pattern to buyer demand. Predictable patterns mean staff can be rostered on at the right times and it's unsettling when the old certainties are in doubt.
The key is to combine a sense of realism and optimism. The realism encourages business owners to focus on the here and now, and get a lot closer to their figures and performance indicators. There is no point in being told after the fact that your customers have changed their behaviour, especially now in times of evident change. The closer you can get to real-time customer behaviour, the quicker you can make changes.
 I heard a great example from the owner of a local high-end gift shop who told me how she had been convinced to buy a good quality computerised barcode stock control system. In December 2009, she quickly discovered, through her new system, that the demand for expensive items dropped dramatically in a matter of days and that certain types of mid-range items (with more margin) were required. She radically changed her stock and made a killing because her competitors failed to adapt to the new reality in time.
The other key at a time like this is optimism - in yourself and your team, and in the local and national economy.
Optimism is incredibly important because it is the other side of the coin of confidence.
Without confidence we have nothing; with it, we can take on the world.
Max Mason is chief executive of Tauranga Chamber of Commerce, which provides networking and support services for local businesses. He can be contacted on email: max@tauranga.org.nz or phone: (07) 577 9823