General Motors Sales Down 45%, Ford Down 30%, Year to Year, October

 

This is sobering news.  In September, sales were also down substantially.  This has to be eating away at both GM’s and Ford’s cash account, and is the reason they are fighting for Government assistance.

 

I always believed that the private sector should be left alone, to rise or fall on its own.  No more.  Clearly, these American Icons are as valuable to this Country as AIG Insurance or Goldman Sachs.  I worry about the effect this potential failure would have not only on the towns and cities in which they operate, but on the entire economy.

 

Just imagine for a minute the closing of all the Ford and General Motors dealerships in your town.

 

The reason I bring this up, other than the obvious, is the question of diversity.  My company, Kaffe Magnum Opus, long ago decided to avoid geographic concentration risk.  We also avoid enterprise risk, that is, we serve many customers around the country and have no single customer upon which we rely for our continued success.

 

This assures our customers and staff that they will be served well through economic turmoil.  Our customers do not have to worry about their supplier; our staff has stable employment with a financially solid company.

 

Retailing is another issue.  It is difficult for a retailer to avoid geographic risk.  The best means today is a channel that did not exist a few short years ago.  Of course, I refer to the internet.

 

Location need not be fixed.  Whether you rent or buy you can pack up and move.  This is not out of the question if your location is hit with a large plant closing or your strip mall loses an anchor.  Go to the action if the action will not come to you. 

 

There is too the option of opening multiple stores, or having multiple types of operations in your town.  At one point I was considering a coffee store (1989) in a Mall and an ice cream store right next door; at that time I was thinking about offsetting seasons. 

 

While my associates, friends and family always observe that I’ve taken risk by starting a business, I am in fact risk averse.  I knew full well what I was doing and I knew from years of experience how to operate many facets of a business.  I limited my risk.

 

So think about your risks and how you can deal with them.  Yogi Berra said “It’s hard to predict, especially if you are talking about the future”.  But plan and think about what you will do to minimize your risk, or expand out of it. 

 

The CEO must have vision and foresight and a plan, written or just in the head, to protect their families, customers and staff; your business must be prepared for the unexpected.

 

Call me if you wish:  856-825-8213. 

 

Please comment.

 

Bob