Growing a Business in a Volatile Economy

The Gross Domestic Product (GDP) is how we measure the output of our economy on a national scale. Investopedia defines the GDP as “…the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well. GDP includes all private and public consumption, government outlays, investments and exports minus imports that occur within a defined territory. Put simply, GDP is a broad measurement of a nation’s overall economic activity. The GDP can be calculated using the following formula:

GDP = C + G + I + NX, where, C is equal to all private consumption, or consumer spending, in a nation’s economy, G is the sum of government spending, I is the sum of all the country’s investment, including businesses capital expenditures and NX is the nation’s total net exports, calculated as total exports minus total imports (NX = Exports – Imports).”

A primer on the GDP can be found here.

The GDP is Just One Indicator

The GDP is one of several other leading economic indicators published by the Government (specifically, the Bureau of Economic Analysis which is part of the Department of Commerce) that will help you understand the general business climate in which you’re trying to operate your business here in the US.

And that climate is increasingly not good.

Using the interactive chart from Macrotrends, we find that our total debt-to-GDP ratio is roughly 3.5:1, meaning that for every dollar we’re outputting as a nation, we have 3.50 of debt. This debt figure includes both public and private debt since the GDP is a measurement that includes both public and private output.

But if you think this is overstated, consider that our national debt is now 100.5% of our national GDP. Our national debt is nearly $19T on a ~$18.5T economy. Consider further that our Federal unfunded mandates are roughly $127T (according to this Forbes article) and that State pensions are underfunded by nearly $1T dollars as well. Add it up. On ~$3.5T of income each year, the Federal government is supposed to somehow pay for $4.25T of spending and cover future obligations of $127T. You do the math.

Companies that are heavily leveraged don’t last long. Servicing their debt sucks up their cash flow and they’re unable to meet other obligations if sales dip for even a small segment of time. These companies live hand to mouth. The difference between highly leveraged companies and the US government is that the latter can just print more money to cover their obligations. But even this ability can only save our country for a period of time. Eventually this debt will sap our strength and stability and render us a 2nd or even 3rd world country. It’s just a matter of time.

If you’re a business owner, you should care about all this because your business will likely be taxed heavily in the future. If you think you’re being taxed a lot now – just live another 30 years. In their book The Coming Generational Storm, the authors predict that a “fiscal child abuse” will double the taxes paid by the younger generation. I can’t imagine that businesses won’t be heavily taxed as well. And I predict the younger generations will rise up and call us (the baby boomers) what we are: the most selfish and self-absorbed, yet the most dysfunctional generation this world has ever seen. And they will be right.

The GDP also helps us understand trends in our economy. You’ll notice in the last four years, our growth has not been consistent. Eight of the last 16 quarters have had a GDP growth of less than 2%, which really means our economy was contracting in those quarters. Our economy grows, the contracts, then grows, then contracts. That’s a tough economy in which to run a small business. Okun’s law will assert that a 1% decrease in unemployment will result in a 2% increase in the GDP. Of course, the opposite could be said to be true as well. The larger point is that in those quarters with less growth, more distress or unhealthiness in the economy might have negatively impacted your business. There’s no reason to believe this up/down economy will level out. It’s tough to grow a company in a volitile economy.

Growing Your Business

Even though it’s tough to grow a business in a flat economy, it’s not impossible. Here are some tips on growing your business in a flat economy.

Carefully Control Expenses

It might seem obvious, but it’s not. I’m surprised at how many small businesses (< $100MM) don’t pay enough attention to expenses. But it’s paramount that this is done. For example, I know of one business that was doing $90M/year in sales three years ago and today, it’s doing $60M. Yet their payroll remains the same and their lines of credit are over 90% utilized. When I talk about controlling expenses, I’m not talking about counting paper clips. I’m talking about getting you’re the core drivers of expenses under control. Ask yourself questions like “Can I get the same sales with one less sales person?” or “can I outsource this function to a third-party for less money” or “is it a good time to negotiate down my facilities costs?” Look at the core cost drivers – especially your fixed costs. Get your break-even down as far as possible by making as many expenses variable or COGS (Cost of Goods Sold) expenses, then get under it and stay there.

Focus on Higher Margin Products and Services

More top line income is irrelevant if you’re net profits are not increasing. Would you rather net $1MM on $10MM of sales or $100MM of sales. That answer is easy: $10MM is better because it would require less cycles to net that $1MM of profit. Every business has products or services that are more profitable than others. Your goal is to figure out how to sell as much of your higher margin products and services while figuring out how to sell less of the other. If possible cut out those products that break even or don’t make money. Sell them off or discontinue them. Focus as much of your business on the higher margin products and services as possible, even if this means cutting your top line revenue and shrinking the overall size of your business.

Invest in Insights

I cannot stress enough that getting financial reports from your accounting system isn’t enough to understand your business. This was one of the mistakes I made in my business – I thought I understood my business by looking at the income statement. At the time, I didn’t know how to read a balance sheet and I rarely, if ever ran a cash flow statement. You’ll need these three core reports, but you should have an outside consultant objectively look at your business and your financials. I’m not talking about your accountant – I’m talking about someone who interprets financial information to understand the story the numbers are relaying. To this end, read Creating Shareholder Value, a standard book for those who read financial reports and know how to turn the numbers into insights.

In addition, you need to figure out what the core measurements are for your business. We often call them KPIs – Key Performance Indicators. If you don’t measure your KPIs, you’ll forever be flying blind in your decision-making. Usually, an outside consultant can help with this, but if you can do this on your own, go for it.

Build Cash – and Lots of It

Your only real defense to a fluctuating economy where, presumably, your sales go up and down is a stash of cash. And in an over-regulated economy where compliance to regulations drive up costs, your only defense is cash. Where possible, keep your appetite for spending money at bay and build cash in your business. It will help you in the long run to have it sitting there, ready to cover the down times when you need it.

Get Some Coaching

Finally, if Peyton Manning, Tom Brady, Adrianne Peterson and other multi-million dollar athletes get coaching to improve their performance, then you should too. Find a good executive coach and then keep them for several years. Learn from them. Grow your skills as a CEO by working with them. I am an Executive Coach – you can contact me here. But here is another executive coach who has way more experience than I. And I highly recommend him.

In a turbulent economy, you need to focus on those activities that will help you. Based on these tips, your KPIs should be product margin, cash on hand and your break-even point. If you need additional help analyzing your business, be sure to get the appropriate help.

Bill English

Every End is a New Beginning

I recently listened to a man in his 70’s who has been rather successful in business tell a group of other business junkies that he hopes to give away all of wealth over the next ten years and die, essentially, a pauper. This is a man who understands that he can’t take it with him and by giving his wealth away, he’s building for himself treasures in heaven.

All business owners will leave their business. There’s only three ways to leave a business: liquidate, sell or die. Obviously, the preferred way to leave a business is through a sale of the business – that way, you’ll maximize the value for yourself and family and give your employees the greatest chance of having a job after the sale. If you liquidate, you’re either declaring bankruptcy or purposefully shutting down the business – but either way – you’re not extracting the value of the business itself. And if you die, while your heirs may be able to sell the business, it will be worth much less because you’re no longer in the picture.

How we finish our business matters – just like how we finish our lives matters. This is not a topic that many business owners look at, but it is a topic that they will be forced to confront at some point. So, several points to consider:

  1. The earlier you start to plan your exit, the more likely it is that you’ll extract the maximum value from your business
  2. The earlier you start to plan your exit, the more likely it is that you’ll be able to plan a good transition to “what’s next” in your life
  3. The earlier you start to plan your exit, the more likely it is that your employees will also experience a good transition

When you leave your business, it should be planned and part of a transition that takes you to the next adventure to which God has called you. In my friend’s case, it is planning for his eventual leaving of this earth without hoarding his wealth. He’s giving himself ten years. He’ll use it as God directs him to further the Kingdom of God. Regardless of the amount, this man is successful in business and life.

Bill English

Does Anyone Really Care?

One of my quirks is that I keep track of the national debt.

On December 31, 2014, our total national debt stood at $18,141,444,135,563.30. That’s $18.1 trillion dollars. On December 31, 2015, our national debt stood at $18,922,179,009,420.80. That’s $18.9T. The exact increase was $841,556,354,276.60, or $841 billion dollars.

Who do you hold accountable? Ultimately, it’s all of us. We’re the folks who elect the people who vote for more debt. And we often re-elect them, sending them the signal that we’re OK with their work to raise our national debt so they can give away more stuff to people who don’t need it.

The day will come when future generations rise up to call us the most self-absorbed, selfish, uncaring and unpatriotic generation this country – let alone this world – has ever seen.

Diving into the numbers, we find that the 2015 deficit stood at $72B on November 1st. In the following three days – November 2-4, our deficit was increased by ~$455B. In just three days we managed to borrow $455B. By the end of the year – in just under 60 days – an addition $769B – was added to our national debt. During the time when Trump was capturing the national attention and news media time – our deficits skyrocketed at a rate of ~$12.8B per day in the last two months of 2015.


So what happened on November 1st to cause such an avalanche of over-spending? Simple. President Obama signed the 2-year budget deal which removed spending limits through September, 2017. Calling this a “responsible long-term budget process”, President Obama and a bi-partisan majority of our elected officials saddled millions of unborn Americans with debt that they will never be able to repay and the consequences that come with being a servant to the lender. Aren’t we a caring bunch?

This country is on a spending binge that it cannot stop. We are addicted to debt in our culture. All of this will come home at some point to render us a weak and ineffective nation. You don’t strengthen the country by weakening the government. Few seem to understand this basic principle and it appears to be lost on nearly everyone we elect to Federal office, regardless of party affiliation.

Right now, we’re more concerned with Donald Trump’s meteoric rise in the polls and Hillary Clinton’s email scandal. Both important stories. But does anyone really care about our national debt? Given the deafening silence in response to the piling of debt upon debt, I can only conclude the answer is: “No.”.

Bill English

Lessons from the Life of Joseph Part II

Genesis 37.26-36:

“23 So when Joseph came to his brothers, they stripped him of his robe—the ornate robe he was wearing—24 and they took him and threw him into the cistern. The cistern was empty; there was no water in it. 25 As they sat down to eat their meal, they looked up and saw a caravan of Ishmaelites coming from Gilead. Their camels were loaded with spices, balm and myrrh, and they were on their way to take them down to Egypt. 26 Judah said to his brothers, “What will we gain if we kill our brother and cover up his blood? 27 Come, let’s sell him to the Ishmaelites and not lay our hands on him; after all, he is our brother, our own flesh and blood.” His brothers agreed. 28 So when the Midianite merchants came by, his brothers pulled Joseph up out of the cistern and sold him for twenty shekels of silver to the Ishmaelites, who took him to Egypt….36 Meanwhile, the Midianites sold Joseph in Egypt to Potiphar, one of Pharaoh’s officials, the captain of the guard.”

Joseph was a highly talented guy who became the Governor of Egypt. He had the rare combination of excellent leadership and management abilities coupled with a humility and submission to God. But before Joseph could be entrusted with leading an entire country, he first needed to undergo God’s preparation.

God’s preparation started by cutting Joseph off from all his resources and sending him to a place where there was no turning back to his past. Joseph was forced to move forward. God’s preparation started suddenly, without notice and it involved being humiliated and sold into slavery. I would imagine that Joseph wasn’t just upset – he was probably in the depths of despair as the caravan moved away from his brothers. He was probably furious, scared, depressed, anxious – all at the same time. In the span of a few hours, Joseph went from being the favored rich kid of Jacob to being a slave. A sudden, dramatic change that could not be reversed. His life would never be the same.

God also focused first on that which Joseph loved the most: his coat of many colors. The first thing God took away from Joseph was the material artifact which he loved the most. His brothers took his coat and sold him into slavery. And, showing the extent of their hatred and disdain for Joseph, they sold their own flesh and blood into slavery, knowing full well that he would be mistreated – perhaps killed – and they would never see him again. Joseph got to see the full extent of his brother’s wickedness.

God’s preparation of Joseph started suddenly, focused first on his “sore spot”, opened his eyes to the wickedness of others and took him to a place of despair and no return.

In American business, we don’t use these methods to prepare people for leadership. Instead, we prepare our future leaders by sending them to a prestigious school where they will learn the latest thinking and research in the principles of leadership. We say “Sue, you look like you could be a great manager – perhaps CEO someday – so let’s start your fast-track-to-success by sending you to school.” We also give them opportunities to lead – hopefully with a good coach – and give them opportunities to develop their leadership abilities so they can assume more and more responsibility and authority. However, in our a-moral society, we don’t focus too much on the crafting of character as a core developmental focus. Somehow, we give ourselves permission to disconnect (perhaps not entirely, but certainly at some levels) what one does with who one is.

When God prepares a man, He prepares his character first and his skills second. Whatever skills and abilities we might have were given to us by God in the first place, so He’s not short on skills. He is short on a people with Godly character. God wants leaders who are congruent in every aspect of their lives. So God’s schooling is entirely different than mans’ schooling. God says “Sue, I want you to lead a nation through a famine, so let’s start your fast-track-to-success by sending you to Haiti to clean toilets and work in the kitchen.”




And if Sue follows God, she learns that leadership is much more about who you are than what you tell other people to do or about the vision you might cast.

If you show people that the path to great leadership starts with dying to yourself and submitting to another who will test the mettle of your character, the number of applicants will be quite few. People don’t want to sign up for suffering and submission, they want to sign up for success. They want the admiration of men. They want the money and perks that comes with corporate success.

I believe it is the same with small business owners. Nearly all of us at one time or another have dreamed about building an impressive, large, influential business. Entrepreneurs can’t help themselves in this dream. But God throttles by taking us through suffering because he knows we’re not ready for that kind of responsibility. He knows we wouldn’t be able to steward that much money and power well. It would go to our head. It would corrupt us.

So God calls us to His school of preparation. He calls us to greatness by asking us to die to ourselves. And when we agree, our lives usually get worse, not better. DL Moody heard a man preach that “the world has yet to see what God can do through one man who is completely sold out to Him.” Moody purposed in his heart that he would be that man. Within days, both his church and his house had burned to the ground.

If you’re a Christian business owner and you have just experienced a set of events which has damaged your business or yourself, then consider that, perhaps, God is admitting you into His school of preparation. Perhaps you’ve lost a major customer and need to downsize. Maybe you’re being wrongly sued and you don’t have the money to defend yourself. Perhaps one of your trusted employees has just betrayed you. Or maybe your marriage is falling apart and you don’t know what to do next. If events like these have taken you to a place of no return and perhaps personal despair, then look to God and ask Him what He’s doing in your life. God may be preparing you for a much more important ministry in the future by refining your character and your walk with Him.

Joseph was sent to Egypt. God may not send you to another country, but He may very well take you through very deep waters. Are you willing to give it all up for Christ?

Bill English

Lessons from the Life of Joseph Part I

The Life of Joseph is a portrait of a man of integrity and forgiveness. Joseph was a highly talented guy. In today’s vernacular, we’d say he was “crazy smart”. His strongest gifting from God was his ability to interpret dreams, yet his greatest ministry to mankind would not utilize his strongest gift.

Gifting and the Call of God

Our gifts and calling to serve in particular ways are irrevocable: “…for God’s gift and His call are irrevocable” (Romans 8.29). Irrevocable – used 4 times in the NT – is translated “no regret” twice and “irrevocable” 2 other times. It literally means “feeling no pain of mind on account of something done (or experienced) in the past; especially with no wish that it had been any different.” So, in Romans 8.29, what Paul is saying is that God does not regret giving you your gifts and your call – no matter what happens or how bad you screw up your life. Once you accept Christ as your Savior, your gifts and callings are irrevocable. Period. End of conversation.

When we abuse our gifting, God doesn’t take our gifting away. Yet the continued use of our gift doesn’t imply that everything else is right with us. The reality is that we can continue to use our gift while harboring sin in our lives.

Joseph Abused His Gifting

Out of his arrogance and pride, Joseph told his brothers his first dream and then expanded his audience to include his father when he relayed his second dream (Genesis 37). In both instances, all he managed to do was to drive a wedge between himself and his brothers. They already distained him because he was their father’s favorite. Now, his dreams that claimed he would be their master and that they would bow down to him drove them to hate him. Joseph must have thought that they would admire him and come to recognize how talented and smart he really was. Arrogance always needs to be admired – to be noticed – to be “up front”. Joseph was no different. In his arrogance, he was trying to get his brothers to see how great he would become. Joseph was all about Joseph. And his father encouraged it by making him his favorite and making him a coat of many colors.

Do you have a need to be noticed? To be admired? Do you quietly harbor this notion that one day you’ll be discovered and many will clasp their hands and say “what a talented and great man (or women)”? There are Christian business owners who will share their dreams, hopes and ambitions thinking it will coalesce their staff around a common vision when all they are really doing is trying to manipulate their way into being admired by everyone around them. Some Christian business owners share so much about God without regard to how it comes across to their employees that they actually drive people away from God.

Entrepreneurs are known for being people of great confidence who assume risk to grow businesses that create jobs and profits. But for many of them, you can’t tell them anything. Their confidence has coalesced into pride. Christians in business are just as susceptible to this as anyone else. If you’re business is all about you – if people are giving you good advice and you usually shrug it off because you know better – then beware: the day will come when your most trusted advisors will turn and walk away. You’ll feel betrayed and alone. Yet you’ll have no one to blame but yourself. Your pride and arrogance will have killed your business.

While Joseph went too far with his brothers and father – who can deny that an authentic work of God was initiated in Joseph by God? In spite of what we read in Genesis 37, we get this notion that God had begun a great work in Joseph. Yet we also sense that God would need to change Joseph so he could be of real use to God. In a very real sense, God had shown Joseph that He was going to use him in significant ways.

Usually when God shows us that He is going to use us, we think it will be in the next week or two. We think we’re quite ready. Yet, often times, it is a long time before we’re ready to be used by God in mighty ways and this includes growing an influential business. Consider the examples in Scripture of how long it took God to prepare some for significant ministry:

  • Joseph was 17 when he was betrayed – it would be well over a decade before God could use him
  • Moses spent 40 years in the desert
  • David spent nearly 20 years running from Saul
  • Nearly all of the minor prophets were old men when they prophesied
  • Christ spent 30 years getting ready for His public ministry
  • Paul spent 3 years in the desert

Maybe God has called us to do something and has gifted us for it. The fact that we have a gift doesn’t mean we have the wisdom or the common sense to use it. Flaunting a gift comes from our need to be admired – but it nearly always results in others disliking us.

Maybe you’re older and have been in business for many years. Maybe you have yet to see God’s greater purpose in your life. Perhaps you’re ready to give up. You thought you were going to be used – but it hasn’t worked out. Be encouraged: God isn’t done with you yet – keep going – keep being faithful to Him.

We must die to ourselves

To be used greatly by God, we must first die to ourselves. We must jettison the notion that our business is about us. We need to rid ourselves of our need for money and admiration. We need to downsize our lifestyles and learn to live on less. We need to under-size our appetites for the finer things in life. We need to submit the enjoyment of creating profits and jobs to our enjoyment of God’s presence. Our ambitions need to become about using our businesses to further the Kingdom of God. In short, we need to die to ourselves.

Easier said than done – yes. Some will understand what I’ve written. Many will not. And it’s a message you’ll *never* hear in any MBA program, even those that are Christian based.

His Brother’s Sin

When his brothers put him in the pit and then later sell Joseph to the Ishmaelite’s, they demonstrated their own sin and commitment to keeping that sin in their lives. Let’s not think that his brothers were without sin. Here’s some of their sin:

  • Jealousy
  • Conspired to kill Joseph
  • Mocked Joseph
  • Lied to Jacob
  • Self-Justified
  • Respectable neutrality
  • Sold their brother into slavery (Gen 37.27)

Often, your competitors and sometimes, your own staff will engage in these sins. Perhaps your second-in-command is jealous of your success. Perhaps your competitors mock you at trade shows for your faith in God. Some will lie to you and then justify their lies creative ways. Even as you try to live for the Lord in your business, bear in mind that others may live in sin and their sin will hurt you. You will feel betrayed – as Joseph did. And God will have you where He wants you – in a pit where all you can do is pray and trust Him.

One of the most difficult things for an entrepreneur to do is to give up his self-sufficiency and fully trust God. Yet if we don’t do this, God will strip away everything we trust and have so that all we can do is pray and trust Him. He cares little about our business. He cares most about our character and relationship with him.


Joseph was not ready to be used by God. He abused his gifting and used his strongest gifting to drive people away from him. He needed to be admired because he was so arrogant. What Joseph needed was preparation and polishing.

Are you gifted and called? Is God still preparing you? Can you make your business “all about God?” Will you allow God to commence His work of chipping away at anything in you that doesn’t conform to the image of Christ? Will you submit your business to the Lordship of Christ?

I pray that God will raise up an army of Christian business owners who operate in humility, righteousness and full dependence on God Himself. Only then will we see an awakening in the American marketplace.

Bill English