A Headline Which Summarizes 2023
January 5, 2023
If one headline summarizes not just what to expect in the coming year, but how Corporate America works in general, it’s this one: Amazon announcing they’d laid off more employees than expected while exceeding Wall Street earnings estimates. The corporate priorities are on full display. (As I write this post, the stock is up 2.5% in the pre-market.)
It’s not just Amazon; it’s Corporate America generally. Making Wall Street happy is a much more vital management imperative than creating a stable environment for employees. Cost cutting, centered in layoffs, is just what you do when you want to meet Wall Street expectations and you don’t have any other innovative ideas.
The negative headlines are proliferating as layoffs are widening out beyond the tech sector. Salesforce just announced plans to dispense with 10% of their workforce. Goldman Sachs, according to some reports I’ve seen, is expected to lay off up to 8% of their employee base, following layoffs from Morgan Stanley and Citi in 2022.
A lot of small to medium-sized business owners are wary, if not downright scared. Some who have larger companies as clients are seeing projects they thought they’d have in the first quarter get delayed or cancelled.
I’ve also talked to quite a few business owners who aren’t seeing issues in their sales pipeline, but the headlines have them worried.
So, the question, if you’re a solo or small firm professional services firm, is simple: what do you need to do about it? How do you advise your clients and hold their hands through all this negativity?
For me, it’s acknowledging fear and being the calm voice clients need to hear.
None of us knows exactly what to expect this year. I certainly don’t. What I’m 100% certain of, though, is that heightened fear makes otherwise rational people make irrational decisions.
As advisors, our job is to bring a calm, non-anxious presence to our clients. It doesn’t mean dismissing fears as “irrational.” On the contrary, it means acknowledging the fear, yet at the same time, reminding clients that in many cases they’ve been through much worse situations than what today’s environment brings.
In general terms, here’s what I’m talking about with my clients:
–Corporate America will continue to do what they’ve always done: lay people off to make earnings. This behavior is as predictable as the sun rising in the east. Nothing new about it.
–They’ve got ways to camouflage it, you’ll continue to see age discrimination. A disproportionate number of those layoffs will be focused on older, higher paid employees with health insurance costs, because of their age, which are high and rising.
This behavior is a leading indicator of a wave of new business formations, in my view. That 52-year-old who just got laid off is not going (or can’t afford to) sit at home and do nothing. Further, some of these new businesses will come from other ex-corporates who see what’s going on and say "enough." They’ll jump before they’re pushed, or maybe they’re just tired of the pile of bull bagels they’re fed by their employer.
These individuals have the net worth to start a business or buy an existing business. If increasing new business formations helps your business, then you’ve got a positive trend to look forward to, in my view.
–My guess is that the “consensus” is entirely too negative, so much so that I suspect this year will turn out to be a better one than expected. When the “Bloomberg Model,” whatever the Sam Hill that is, is at a 100% probability of recession, and CFO optimism indices are at 12-year lows, there's two good indicators that there’s a lot of room for the actual economic results of 2023 to exceed such morbid expectations.
(By the way, the idea that some model can accurately predict a $23 trillion economy, given the millions of inputs which determine the direction of that economy, is downright laughable.)
Feel free to share your own perspective in the comments on what we have to look forward to in 2023. My crystal ball is no better than anyone else’s.
What I know with certainty, however, is that my job as a professional services provider is to bring calm and perspective to clients who are uncertain and fearful.
And that calm has value, value which right now is incalculable.
Image created using Craiyon (Formerly DALL-E Mini)
(This blog post was also posted on LinkedIn.)
©Ray Business Advisors, LLC and John Ray
About me: I help solo or small professional services firm owners with the confidence and positioning necessary to improve their pricing and change the trajectory of not only their business but their life.
I have a podcast called The Price and Value Journey, which features interviews with industry leaders and audio versions of my blog posts. You can find the podcast on your favorite podcast app.
I also have a book coming out in 2023: The Price and Value Journey: Raise Your Confidence, Your Value, and Your Prices to Grow Your Business Using The Generosity Mindset.
For more information, go to PriceValueJourney.com