The economy: What’s going on and why it matters to you
No one needs to tell you that the economy is in rough shape right now. It doesn’t take an economist to give you the news! You may have seen it in your own coaching business, perhaps as fewer people respond to your marketing, or perhaps as potential new clients seem reluctant to pay your fee.
It’s also likely that many of your clients are feeling stressed by the economy and are looking to you for guidance. You might be a productivity coach helping a client who now feels like they need to be more productive than ever, or you might be a small business coaching helping a client start a business in a time when buyers seem to have disappeared, or you might be a life coaching helping clients set realistic goals in the midst of (or manage stress related to) the economy.
So this post is a quick primer on the economy itself. This blog just paints the economic picture in broad strokes to give you the foundation you need so you can do research that is appropriate to your clients’ needs.
The first thing you should know is that the economy moves in waves that look a lot like waves or biorhythms: there is a period of growth, there’s a peak, there’s a period of decline, and there is a valley. The cyclical nature of the economy is as certain as the cyclical nature of the seasons (but just not as clearly tied to time).
Two of the biggest factors during periods of economic growth or decline are the principles of:
* Supply and demand
* Availability of money
A lot of demand and little supply gets people working to make more to meet demand. That’s a good thing. But at some point, right at the very peak of the economy, supply outstrips demand and that’s when we enter a period of decline as people have to lay off workers and lower prices to clean out their inventory.
And, during periods of economic growth, money is readily available and people seem to be making it hand over fist. Interest rates are low so people can borrow a lot. (This is one reason that the Federal Reserve keeps lowering interest rates – to try and "kick-start" borrowing). There’s a certain amount of irony during periods of economic downturn because people are scared to spend their hard earned money on things and they save their money for better times… but it is the spending of money that helps put cash back into the system and gets the economy moving again.
So, what gets the economy moving again? The most basic answer may surprise: consumer confidence. When people are confident that their dollar is worth something and that they will have a job tomorrow, they are willing to spend their money on items today. And that expenditure, on a national scale, will put more people to work and get things moving again.
So, what does it mean for your clients?
1. The economy will come back. That doesn’t mean it’s business as usual right now but it does mean that they should worry less about next year and just try to make it through the next week.
2. It they are looking to get into a well-time business, the economic valley is a good place to start: If they can find customers here, and learn to run an efficient business with low expenses, they should do really well in the long term when growth returns.
3. If they run a business right now, they need to think about how things will change when growth comes. Will they be ready for it? Lots of businesses fail during growth periods because they don’t have the capacity to meet demand and they don’t have the capital resources to invest in more equipment or raw materials.
4. Setting realistic goals is important right now. Don’t set the same goals as when the economy was ablaze with success.
5. This is not a disaster. Even though buying is down, it’s still happening. There are still many, many businesses out there doing business (and they need suppliers and raw materials), and there are many industries that do VERY well in a recession (including educational and discount retailers).
The above tips are mostly geared toward business coaches, but it’s likely that most of your customers (no matter what kind of coaching you do) have concerns about the economy and need your knowledgeable guidance to get them through.
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