Businesses perceived as being helped or hurt by the economic slowdown

Auto dealerships, among the current economic slowdown's hardest hit businesses, must avoid additional damage by not letting customers perceive that their specific store is hurting.

This advice comes from a consulting firm's new survey. It indicates medium and small business owners believe dealers are among businesses the current soft economy is damaging the most.

“This survey highlights the danger of a perception growing into a self-fulfilling prophecy,” says Donald J. Fletcher, president of the George S. May International Co., a consultant to dealerships and businesses of similar size.

The firm commissioned the survey.

Mr. Fletcher adds, “Customers respect and prefer to do business with successful people. While they may feel sorry for a business that is having hard times, it is dangerous for a dealership to show its difficulties. If it does, consumers will begin taking their business elsewhere.

“This reaction is part human nature and part business nature. And it is very difficult to turn that impression around once it is made.”

Car dealers are expected to stock vehicle selections and offer efficient services for owners. They also are expected to be problem solvers. But when selection is cut back or the problem solver is seen as having problems, customers go elsewhere.

“Customers have expectations,” Mr. Fletcher says. “If there are not met, customers will sense something is wrong. They'll forgive an occasional lapse. But if it becomes a general trend, they'll start to shop elsewhere.”

Maintaining an appropriate inventory and a suitable number of employees for conditions are important issues. Reducing these haphazardly can have a boomerang effect when the economy picks up, says Mr. Fletcher.

“Short-term attempts at a solution can actually compound basic problems the operation is experiencing,” he says.

The survey indicates a general agreement that the softening economy is hurting most businesses, at least in the short run.