At ground level the recession grinds on, despite recent optimistic comments by various government and other public figures, A recent survey of corporate chief financial officers [1] highlights the gap between hope on the one hand and reality on the other.
Fifty-four percent of U.S. CFOs surveyed were more optimistic this quarter than they were last. But on average, the “CFOs say the recession will last another 10 months,” and they are continuing to maintain tight control over spending.
This is a classic pattern: management actions tend to lag
changes in the environment. At the beginning of a recession, managers hope for
a quick rebound. They begin to seriously reduce spending only when it becomes
clear that the revenue decline is not a brief aberration. On the rebound,
managers must be absolutely convinced that revenues are turning up before they
ease up on spending controls.
The key strategy is watchful waiting. Those business owners who have the courage to begin investing again before the pack does will have an advantage over their competitors.
[1] CFOs Hoping for the Best, Planning for the Worst, www.CFO.com, June 3, 2009
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