My wife and I try to go out every Friday night to take some time away for ourselves. Our normal routine is to catch a movie and a dinner. We love the movies as it’s relaxing and one of our favorite things to do. We’ve seen movies this month like Joy, Sisters, and tonight we saw The Big Short. Jeanna was reluctant to go see this one as it’s more of a Wall-street/Investment/News type of movie which typically bores her to death. I will say this movie was anything but boring, even for her.
The writing was suburb, the acting was incredible, and the story was very engaging. As someone familiar with the securities, investing, and financial industry I was amazed how the producer and writers took such a complex & mundane subject such as derivatives, credit swaps, and CDO’s to make such a compelling and engaging story. I will submit that this may be due to how profoundly affected our family was during this time period just a few years back.
For many years I was in the music business. In 2001 I ventured out on my own to start my own company. Through that new endeavor I discovered online marketing, and how to wholesale pianos directly to new home buyers from the factory over seas. Because our business model cut out 2 layers of distribution in the traditional business model we found success very quickly. Companies like Costco, Suzuki, and several other large companies started using our business, and adopting our new distribution model. Life was really good up until the 2nd quarter of 2007. When I saw this movie tonight it was like PTSD gripped me with what I just seen and heard.
The area of the country the story takes the characters in is the very area of the country we were pumping a ton of pianos in prior to the collapse. I remember wondering how people prior to the housing market collapse could afford to buy 2-3 homes, and put 1 of my pianos in each of them. This movie explains how this whole ticking time bomb was built, set, and detonated. It really is enough to make a preacher cuss. Why more people did not go to jail is beyond me. How this time period had such a profound negative effect on so many is incomprehensible. It’s also encouraging though to see the resilience in so many people that came through this period. I meet them every day now in my coaching & consulting business.
When I speak to entrepreneurs today they all have a story from that time period. I don’t know of anyone who wasn’t profoundly effected by the collapse of the housing market which lead to a terrible recession. For many it wasn’t a recession, but a full blow depression. I remember Ronald Reagan explaining the difference one time was that a recession is when your neighbor lost his job, but a depression is when you lose yours. For me and my family it was a full blow depression. However I’ve learned a ton from it.
- I learned to be way more frugal in my business planning. I watch my operational cost like a crazy man.
- Never allow your business to be dependent on one sector, market, or industry.
- Never run a business that requires large inventory.
- Opt for higher margins with slower turns, rather than lower margins with faster turns.
- Scale your business by outsourcing rather than accepting the full liability of growth.
- Be flexible in who, what, and where you are.
- Leverage technology to automate many of your marketing, sales, and training processes.
- Take measured risk
- Always question the status quo
Contractions in the economy, market, and life will happen. Staying flexible & lean will help overcome the next macro shift.. If you would like to get a free audio book of The Big Short you can pick one up by going to terrywilson3.com/freebook