How I Know the Recession Is Over

Posted by on March 20, 2011

The Monday Morning Memo for March 21, 2011

As you do or don’t know, I make my living as an advertising consultant. My income is directly tied to the growth of my clients’ businesses, so you can be sure I keep a close eye on their income trends.

Although my office works with only a few dozen of America’s 5.91 million businesses, these small business clients are spread across the US and Canada and span several retail and service categories. Additionally, my Wizard of Ads partner offices work with dozens of scattered clients, as well.

We keep our finger on the pulse of small business America.

The media keeps its finger on the pulse of big business America and unemployment statistics and the value of the dollar and a variety of other things they like to package as news about the economy.

Don’t be fooled by it.  Big business is affected by Wall Street, an insular world of fast-walking men and women who live in Manhattan and wear formal business attire and pretend they know far more than they do.

Meet these people. Spend time with them. You’ll soon quit taking them seriously. This is the same crowd who thought Bernie Madoff was a profoundly insightful financial guru, remember? They even made him chairman of Nasdaq.

Big business is subject to Wall Street.
Wall Street is subject to the mood of traders who buy and sell a lot of securities. Small businesses like yours are subject only to the mood of the public.

I’ve known for years that the mood of the public is not directly linked to Wall Street. Trends in small business America don’t always mirror the trends in big business America.

The American public began to relax a bit in October. We saw it across every business category in every state. The news media didn’t seem to notice. We saw this trend continue through November and December.  Most of our clients finished the 4th quarter 10 percent ahead of the same quarter the previous year.

This uptick continued through January and February; not a sweeping “whoosh” back into prosperity, but an obvious collective decision among regular Americans to start spending a bit of money again. The deep fear is gone.

My friend Jeff Haley is the CEO of the Radio Advertising Bureau, a vital trade association of America’s 11,000 commercial radio stations, each of whom sells advertising to several hundred local businesses. When Jeff came to visit recently, he said he’d noticed the same thing my partners and I had noticed. During the first 3 quarters of 2010, ad spending among local advertisers was dead flat against the previous year. No change. Then it jumped by exactly 10 percent in the 4th quarter.

The American public relaxed a little and America’s local advertisers did, too.

Donations to Wizard Academy rebounded, classes started selling out again and the weddings at Chapel Dulcinea are more lavish and festive than we’ve seen in a couple of years.

The light at the end of the tunnel is getting brighter. Grass is greening, birds are flirting, spring is here.

Don’t let anyone tell you otherwise.

Roy H. Williams

PS – When Jeff Haley was at Wizard Academy we talked at length about Selling Customers Their Way, the April 5-6 class taught by Dennis Collins and Ken Brand. Increase your close rate by 20 or 30 percent and you’ll increase your sales volume by the percentage; no increase in ad budget, no increase in inventory, no increase in selling opportunities required.

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