David Stowell

2008 is already breaking my heart as I watch private practices struggle, "wither," even close. There are others who haven't yet figured out what is about to hit them as we get further into the year.

This is shaping up as the "make or break" year for many, maybe even a majority, of private practice owners.

And it just kills me to see so many practices struggling when so many kids are desperate for our kind of services.

This is a pivotal year. This is a year unlike others. In my lifetime, I've never seen an upcoming year like this one.

Why?

There are 5 specific conditions that are influencing the economic decisions our society is making. It's the proverbial "perfect storm" where, against all odds, the factors and conditions line up and "strike" all at the same time.

For many, it will be a "knockout blow."

Here are the 5 -

1. A Cyclical Economic Downturn
   Economies go up and then they go down. OK, that sounds a bit oversimplified. But it's actually right. Politicians try to blame each other for economic cycles. But the reality is that after the economy goes up, then it goes down....usually not as far down as the previous lows. But they do go down. This is normal.
   
   And right now we are in a down cycle.
   
   How far down will it go? No one really knows. The politicians are trying to keep it from going down too far or too fast.
   
   But it is going down and will continue to do so for a period of time. If it doesn't go down it just means we have postponed the inevitable.
   
   Remember, this downturn, by itself, is not an extraordinary event. This happens every few years. It is expected.
   
   
2. Political Uncertainty
   It started in the election of 2000. The race between George Bush and Al Gore was very close all fall.
   
   Again, not necessarily an unheard of event.
   
   But the Florida debacle was unprecedented in modern times.
   
   Not only did we not know who won "the morning after," we didn't know for weeks! One day we heard George won, the next day we heard Al won. And it went on and on.
   
   Fast forward 4 years to the 2004 election. We all remembered the previous election. Again, neither candidate was leading by a large percentage and so we all braced ourselves for what might happen. While the outcome in 2004 was determined faster, we could feel the reluctance by consumers to commit to spending money.
   
   Now, 4 years later, we have the wildest races in decades.
   
   Who will win? Who will be nominated? As candidates drop out we begin to wonder how the Republican and Democrat candidates will fare against each other. It is possible the Democrats will go into their convention this summer without a nominee.
   
   If one candidate gets way ahead, the economy evens out. And it doesn't matter which candidate gets ahead. People don't have to like the candidate. They just have to know what to expect.
   
   But for now, it's all up-in-the-air.
   
   
3. Housing/mortgage crisis among our target demographic
   The current housing crisis has hit California particularly hard. Houses that would be $200,000 in most of the country sell here for $500,000. It's insane and has been for years.
   
   When the opportunity to get a good house in a good neighborhood came up, many people took advantage of the ridiculously low loan rates and grabbed the house. No one ever expected interest rates to rise as fast as they did.
   
   And many of those hurt by the rising interest rates are families...families that also need our services. When those families are about to lose their house, they stop spending money...especially for our services.
   
   And the real "double whammy" is that often those are also the parents who have lost jobs in the economic slowdown!
   
   I know that the federal government has talked about trying to stop the foreclosures, but a lot of damage has already been done, and no one is sure what will happen next.
   
   
4. Historic highs and uncertain future of oil/gas prices
   I remember when we all were astounded as gas crossed the $1.00 mark. We knew it would go down...and it did for a little while.
   
   And then we crossed the $2.00 barrier. And the $3.00 barrier.
   
   How much further will it go up? Who knows. In Europe they pay over $6.00 a gallon.
   
   As long as there is unrest in the Middle East and we have to outbid China for oil, prices will continue to rise.
   
   The bottom line here is that the news isn't good and it isn't getting better. How bad will it be? How far will prices go up? Are they peaking now? Are they going to fall?
   
   No one really knows.
   
   
5. More informed / less knowledgeable parents, with a "Burger King" mentality, who often let kids decide.
   This is a new one caused by a combination of the next generation of parents, and the internet.
   
   I belong to the "helicopter" generation of parents.
   
   We hovered over our kids and made sure the right things happened. We expected them to work; to earn their way to success. We just wanted to know that if they paid the price, the "rules" would allow them to succeed.
   
   But now we seem to be having a much more indulgent generation of parents. They don't want their kids to have any discomfort in any aspect of their life. Even if the discomfort of hard work and struggle helps them get ahead.
   
   Think about the "nanny" TV shows...Parents who completely let the kids run the house. It doesn't work for anybody in the family, yet it continues.
   
   At the same time we have parents who get on the internet and self-diagnose learning problems. They come in and demand certain programs that may or may not be appropriate for their child's learning issues. The old adage "A little knowledge is a dangerous thing" certainly applies these days.
   
   And they demand to "have it their way." Whether it works or not. But if it doesn't work, they will blame you.

The world of 2008 and the market conditions we are facing, are different than at any time in the past.

There is a key concept that controls the effect of the first 4 conditions; one word that predicts difficult economic times: 

Uncertainty

Markets HATE uncertainty.

It doesn't matter if the conditions actually have an effect on the market. In fact, most people will not be touched by any condition other than rising gas prices.

But they fear something bad may "touch" them. And that fear keeps them from making any new commitments about spending money.

We saw it in the 2 gulf wars. We saw it in the weeks after 9/11.

What makes 2008 different is the
number of conditions, the 4 major uncertainties,
 that are stacked on top of each other.

Talk about piling it on!

And add to that mix the parent factor...we've got one of the toughest markets in decades.

The easy solution is to have certainty.

But we don't have control over these four conditions.

Please realize, it isn't just our kind of business. Almost ALL businesses are having down years. What I'm sure of is it isn't going to resolve until the election becomes clear. And who knows when that might be.

The very smartest thing all of us can do is assume it will NEVER get better! We must learn to prosper when the economic conditions are stacked "against" us.

The good news - There ARE answers.

What can you do? Can your business survive?

How can you, amidst unusually difficult times, have your best year ever? Is that even possible at a time like this?

The answer to surviving, and even thriving, lies in your ability to take different actions which will promote and grow your business even in difficult times. It means re-investing your time and energy. In other words, you will have to spend some of your time and energy doing different activities than you are doing now.

It means learning new skills, developing new habits, looking at your business in different ways.

My agenda is to see that there are solutions for students in all communities who need help to solve learning issues. Only with strong thriving practices can that help be available.

What I know from experience in working with private practice owners over the last ten years is this:

The vast majority of private practices barely
survive when economic times are good!

I want to help change that. I want to do all I can to help owners get their practices "on track" so that they can thrive even when times are tough.

• When you really develop your business you can help more students. When you don't, students who need you can't even find you.
• When your business is thriving it energizes you. When it is struggling it becomes a drag on your emotions and your life.
• When you are profitable you get to help students who truly can't afford it. When you aren't profitable, those students don't get the help they so desperately need.

In part 2 I'll talk specifically about what needs to be done to not only survive, but to grow and prosper even in these difficult times.