IN THE 30 years or so that I’ve been running businesses, I’ve noticed that consumer sentiment is not only powerful but it is often created by a cultural environment rather than what is actually happening in folks’ lives.
It seems that many people get pulled along with the general vibe instead of forming their own views.
This can work in favour of over-exuberance or it can create gloom. So positive sentiment can encourage thousands of amateur investors to buy “dotcom” stocks at highly inflated prices, or negative emotion can undercut a stock market, so that even 10 quarters of good results fail to impress investors.
We’re currently in one of the negative phases where the headlines are filled with pessimistic stories and we’re more than happy to absorb the sentiment, make it our own.
But there’s another way to treat the “bad” economic news and that is to see a free market economy as something that moves in cycles, which forces the constant revision and reinvention of just about everything.
An example I’ve been watching closely has been the financial troubles of the Darrell Lea chocolate and lolly brand, which has been in administration. I don’t want to give the impression that a business being unable to pay its bills and having to let go of 418 people is a good thing. But there is a positive to the story, and that is that the system works well enough for a new owner to step in and buy Darrell Lea and reinvent what that business does.
The buyer, VIP pet food owner Tony Quinn, told a Brisbane newspaper: “Let’s have some fun. Let’s fix this thing.” That’s the reinvention effect of our economic system – that’s a business brain that knows how to see the positives in a negative.
The signs of positives defying the negative are all around us.
Yes, Kodak went out of business, but other companies have reinvented personal photography, ensuring we can all afford a good camera and that we can choose which pictures we want printed. And Australian steel-making may be under pressure, but there was OneSteel, quietly making itself a miner of iron ore, not letting itself be forced into irrelevance.
Australian business owners and householders can train themselves to think this way as well – it isn’t just the domain of the entrepreneurs and the professional managers.
If you own a business that has slack sales, there is a way forward: you just haven’t found it yet. It may be as simple as rethinking what you sell, what you make, how you present yourself.
It’s the same in households. What might be an uncertain economic system in some people’s minds is actually flexibility for another person. The ability to up-skill, find another job, reinvent yourself as a different proposition to an employer, has never been better. You just have to start by seeing opportunity rather than doom.
Take the uncertainty created by the European crisis and the US slowdown. It has played on our minds and held back our own economy. But one of the benefits has been a cash rate which – at 3.5 per cent – is in the lowest range of the past 20 years.
Don’t be tempted to whine when you have interest rates like this – ask any baby boomer, who was paying 19 per cent on their first mortgage.
There are many people suffering right now, but to those who are not – but are thinking negatively, anyway – have a look behind some of the negative economic stories, see where you really sit. Inflation ran at about 1.2 per cent for the year to June, and the wage price index was sitting at 3.6 per cent. So wages are increasing at a greater rate than inflation is acting on the price of general goods and services.
That isn’t bad, especially taken with a low unemployment rate of 5.2 per cent in July. It doesn’t look exactly gloomy when compared with the US at 8.3 per cent, or the EU at 10.4 per cent unemployment in July.
And in a country where we all need a car, they are more affordable than they’ve been for a long time. The Allianz company’s research showed that a Ford Falcon in 1960 cost a man 60 weeks’ pay while in 2012 it cost 30 weeks’ average male pay.
The economy will cause more businesses to close or to contract – there’s nothing we can do about that. But the important part is what happens next, who sees it differently? And in your own life, are you keeping your eyes open, preparing yourself for what happens next?
A market economy always provides the chance to start again. What’s your reinvention?
Mark Bouris is executive chairman of Yellow Brick Road Wealth Management, ybr南京夜网.au. Follow Mark on Twitter at @markbouris.
This story Administrator ready to work first appeared on Nanjing Night Net.