Turn on you local news, pick up a newspaper, read any blog or even listen to President Obama, the economy is in a serious recession and your business is likely to decline and possibly fail. Prepare yourself, cut your expenses, trim your staff and pray you can make it. Is this how you feel each and every day? I know I have and I’m starting to resent it. Unfortunately, much of the financial crisis we’re experiencing is nothing more than a self-fulfilling prophecy.
I’m reminded of a fable I heard a very long time ago.
Mr. Battaglia had a flourishing hot dog stand on Rt. 38 on the edge of a very busy shopping center near Lombard. He had signs extending every few miles from Chicago to Geneva. They read: Stop at Battaglia’s! We Serve the Best and Largest Hot Dogs in the Midwest, Tasty Char-Grilled Franks with a Sauce from a Cherished Family Recipe. He ran ads in the newspapers and handed out circulars in the cities around him. His hot dogs and service were good and his business was BOOMING. Things could not have been better.
He decided to expand. He met with a financial consultant who had an MBA from one of the larger business schools. The consultant, after hearing Mr. Battaglia’s expansion plans, said “All of the financial writers and even Washington say that the business outlook isn’t bright. We’re on the brink of a serious recession, there is double digit inflation, money is tight and expensive, there is an energy crisis and people won’t drive to your hot dog stands. It would probably be wiser to think in terms of a holding action and even a cut back in expenses.”
Mr. Battaglia, who didn’t have a great deal of formal education, respected the learned counsel of his advisor. He went back to his hot dog stand and tried to think of ways to cut costs to prepare for the oncoming recession. What to cut? Not the hot dog and bun orders — he needed those for his present business. He decided one of the expenses he could cut immediately would be the newspaper advertising and the circulars. He stopped these services immediately. He realized that the consultant’s advice was sound because within four weeks his sales began to drop. He thought to himself, “The consultant and financial forecasters are really smart. The recession is beginning.”
To cut expenses even more, he decided to take down half the signs which would cut his sign maintenance costs. At the end of two months his business was down 40%. “This recession is really serious,” he told his family, “but I’m going to give it one last try.” He took his diminishing capital and put the road signs back up, began advertising in the newspaper and passing out circulars again. At the end of three months his business was once more booming. He was thankful that the recession was so short-lived and that he survived it.
What part of your financial difficulties could be answered in a simple fable?