Prosperity in The Age of Decline: How to Lead Your Business and Preserve Wealth Through the Coming Business Cycles

Chapter 10Playing Defense to WinEnhancing Profits Even as the Economy Deteriorates

The previous chapter presented ITR's Management Objectives suited to economic and business expansion, Phases A and B of the business cycle. Each was geared to maximize profits and enhance the long-term position of the enterprise. This chapter presents Management Objectives that are defensive in nature but clearly designed to protect and enhance profits on the backside, or downward slope, in the business cycle—Phases C and D. We believe too many business leaders just learn new ways to say no on the downward slope (no to cash outlays, changes, and positive actions) as a hunker-down-and-wait attitude takes over in many corporate offices. We think positive, proactive action is required. Following are some thoughts that will help you in each decline between now and 2030 and in the depression to come.

Phase C occurs when the 12/12 rate-of-change has passed through a cyclical high and is descending toward the zero line. At this point, your quantity of business—measured in either volume or dollars—is still higher than it was the previous year, but increases are progressively declining. The 12/12 is on the backside of the business cycle and in the early portion of Phase C; the data trend's rate of ascent is slowing and will eventually move into steeper decline before Phase C is over, as shown in Figure 10.1.

Figure 10.1 Phase C: 12/12 Is Declining toward Zero

Source: ITR Economics.

Early Phase C is ...