Often with good economic news, businesses release their cost control pressure valves only to see that it was just another opportunity for an economic downturn to once again tighten its grip on their throats. They soon realize that it was nothing more than clever trickery—what once appeared to be a positive economic bounce-back was simply a bright sunny day replacing a previously forecasted storm. Businesses, don’t be fooled by the good news, it is brief and fleeting.

Recent news articles point to the fact that consumer spending continues to accelerate with a few major retailers posting large monthly sales gains. Wal-Mart reported August sales growth of 6%, which was somewhat better than the3% forecast. United Airlines, still struggling through the perils of bankruptcy-court protection, reported stronger revenue results in July and August, followed by American Airline’s 10% growth rate for July. In addition, sales of existing homes in the U.S. unexpectedly rose to their highest levels ever for July and this even in the face of sharply increasing mortgage rates. And finally, MCI (formerly know as WorldCom) reported that it is on track to emerge from Chapter 11. This is all great news, but businesses don’t be fooled.

Most businesses have fought hard to weather the current economic downturn, battered by terrorism, war, and the uncertainty following the collapse of the Internet bubble. Consumer spending, the mainstay of the U.S. economy, may not continue to be enough to carry us into the fourth quarter. After all, most of the consumer-spending arsenal was supplied by low interest rates that helped to spark a home-refinancing boom. Most of these dollars have already done wonders for disposable income levels as their trickle –down effect has benefited many businesses. Tax refund checks also had a positive impact as consumers spent 25-35% of those dollars boosting the economy. Economists believe consumers are spending more of the tax refund dollars than they did from the one-time refund checks in 2001 because they are more confident about the future. Again great news, but don’t be fooled.

There couldn’t be a better time for businesses to take this period good economic news and re-strategize for the future. Perhaps Profit Building Teams could be a key tactic of the new strategy. Simply stated, a Profit Building Team is a team of employees whose sole purpose is to systematically work within every line of the company’s profit and loss statement to find opportunities to reduce costs and improve profit.

It is important for the Profit Building Team to represent a cross section of departments within a company, out-of-the-box thinkers who have cross-discipline, complementary skills that cover the vital areas of operations, marketing, finance, information technology, human resources, telecommunications, and administration. Once identified, the team goes through a process of preparing itself and the organization for innovation management. Ultimately, the team will develop creative cost reduction and revenue enhancement scenarios that will improve profits and strengthen margins, thereby allowing the organization to survive revenue shortfalls or economic downturns. Increased profits potentially could mean that layoffs would be minimized and the trickle-down devastation reduced.

The characteristics of a Profit Building Team include the following:

• It is a group of no fewer than five and no more than eight people who have been selected because they have demonstrated their ability to think “out of the box.” The cross-discipline, complementary, cross-sectional skills they offer must cover operations, marketing, finance, information technology, human resources, telecommunications and administration.



• Team members are committed to reducing costs within each line of the profit and loss statement.



• Team members must hold themselves accountable for reduction of cost and the profit improvement directly associated the team action steps.



• Team members must meet on a regular basis on the same day of the week, at the same time of day, and in the same place.

Although Profit Building Teams work best in large organizations where there is a diverse pool of skills and experiences to draw upon, small businesses can also benefit by partnering with other small companies from diverse industries to form a Profit Building Consortium. In this manner, several small companies pool their talents into one highly skilled team that serves all the businesses involved. Representatives from a range of small businesses, such as an accounting firm, marketing company, web site developer, and mailing service, would meet weekly to contribute their specialized skills and knowledge to the consortium. Like the large organization’s Profit Building Team, the consortium would focus on ways to improve profits and reduce costs in each organization. In addition, the consortium shares a cost-cutting advantage: they can leverage or barter their skills and resources within the group whereby each company offers its services at a reduced rate or in trade for other services within the consortium thus, cutting costs for all.

I am not an economist, but I do have an economic solution. Traditionally, Wall Street has given the nod of approval toward companies that reduce costs through layoffs. This has a negative impact on consumer confidence and consumer spending. What if Wall Street created a Profit Building Team Index to evaluate corporations taking the approach of putting profit teams into place before resorting to laying off employees? Wouldn’t more people keep their jobs during economic downturns? Wouldn’t this help to sustain consumer confidence levels? I believe so. Let’s face it, corporations respond to what Wall Street dictates.

Putting a Profit Building Team into place falls somewhere between job preservation and a downsizing strategy. It is a middle-ground approach that unions and management would embrace. Any company that can survive an economic downturn while holding on to valuable employees is better able to respond to improved market opportunities. In addition, minimizing the number of layoffs helps to slow down the negative effect of a slow economy. In this scenario, consumer confidence would also be high.