Recessions

May 31, 2009 | Leave a Comment

Category: Auto-Biography, Society

I was a sales rep working with my sister when the recession of 1981-82 began to impact my profession.  It wasn’t until it officially ended that it slammed with both fists into the urban and suburban Chicago gift market, where I was making my living selling mostly greeting cards to local stores.  Stores that had been trying to hold out until the recession ended observed how little better business was when it was officially over.  They gave up trying to pay bills they were way behind on and closed their doors.

I lost almost a third of my client base in the 1981-82 period.

The 1990-91 recession is a blur.  I was going through a divorce.  A very large percentage of business was now coming from chains instead of small stores.  As long as the chains bought, business was OK.

I was starting a new profession when the 2001 recession hit.  My small website design firm grew quickly right through the downturn, adding on several new clients every month.  I was in the business of offering small, inexpensive sites to small businesses that didn’t have a website.  It was as if a recession wasn’t even happening.

This recession is feeling like the recession of 1981-82 in that more and more of my clients are taking longer and longer to pay their bills.  Whereas consistently 60 of almost 400 would have not paid their bills at 60 days past date of invoice, this last quarterly cycle it was 115, almost double the usual number of slow payers.  Shops or services serving folks with homes got hit first, beginning last summer.  Rug shops, furniture shops, interior designers, architects, framers, builders, contractors and fix-it guys all got slammed.

The subdivision guys starting going after the single housing builders.  The single house guys started doing renovations.  The renovation guys make do with fix-it jobs.  The fix-it guys were not getting calls.  For the interior designers, it was like the world stopped.  I work with several.  Their phones are not ringing.

Now it’s the restaurants that are most obviously being hit.  In December, the number of party bookings was way down, particularly office parties, with cancellations becoming common.  Many of my clients saw a 40-50 percent drop in business in December.  It’s not just high end, though they seem to be getting hit the worst, but the lower end is losing lunch and dinner business.

And the retailers are getting slammed.  Again, winter months showed 40 percent drops in purchases.

More and more of my restaurant clients are paying me in gift certificates.  One is calling them trade certificates because it’s become so common to pay bills with certificates.  With over $6,000 in restaurant “trade” certificates, it’s becoming necessary that I find ways to convert these into cash or other products or services that I would normally consume.  I would prefer not to give staff bonuses in gift certificates, but it’s now a possibility.

And I’m losing clients at a rapid clip.  Mostly they are trying to manage their website themselves to save money.  Several are going out of business.  Many are more than 90 days past due on their quarterly bills, the point at which I shut off websites to encourage them to pay.  At this time, I’m not shutting down websites.  These are unusual times.

Most of our clients are holding on, waiting for the economy to improve.  In the 1981-82 recession, it took the recession’s ending, with the observation that business was not improving, for stores to close their doors.  I’m not clear that an announcement will emerge anytime soon that says this recession is over.  That being the case, I’m not sure what if any signal or piece of information will tell the businesses I work with that it’s time to close their doors.  When I went through this in the 1981-82 period, they did not provide much warning that they were disappearing.  They owed too many people too much money.  They put up signs offering closeout sales and 50 percent off all products, hoping vendors would not see.

The death of a business is not like the death of a person, though the level of grief for the proprietor and close staff can feel the same.  Nevertheless, the proprietor can start another business.  The staff, with difficulty, can get another job.  The grief at the loss can run deep, but there are other ways to make money.  Shoppers, they can go to another store, eat in a different restaurant.  Sometimes we see the proprietors and staff in new positions.

Still, hard times hurt deep.  It’s looking like these hard times will hurt deep and long.


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