by Peter Wolf.

Wow…is all I can say when I look back at my last blog of November 2008. It seems that people have been concerned about major changes in the last quarter of 2008. But, I don’t think many have foreseen the magnitude of change in our world’s economy. Ripple effects have now reached everybody, both on a professional as well as on a personal level.

Speaking of change, I have recently left PRS Guitars after 23 years of creating something truly remarkable together. I’m glad I can say it was an amicable departure. I have nothing but respect for the people, the brand and the product and I’ve certainly shed a tear or two in the past weeks. But, I’ve also moved on and I’m looking forward to new challenges, meeting new people and creating new relationships.

I think what we’re seeing right now is a major re-alignment of stars on all levels, or to say it differently and less esoteric, all decks are getting re-shuffled in every industry. There is a bit of panic amongst executives, especially amongst the ones who have (purposefully or not) disconnected themselves from the market place or have never really been connected in the first place. They simply don’t know what to do, it seems.

The numbers game doesn’t quite work anymore and reports, curves and projections are all pointing in the same direction. Down.

The general impact on sales and revenue is pretty dramatic and can be felt everywhere. On top of this, most companies have already been operating at their limits and further decline of orders, sales and ultimately revenue will be tough to weather in the next few months. The war chest I spoke about in Part 1 has become more important than ever. This goes for companies and individuals alike.

However, this is a good time for consumers who are looking to buy since everybody is offering deals right now. At the same time people, systems, brands and products get tested on a whole new level.

Brands, like people, need to redefine themselves constantly in order to survive, successfully compete and stay on top. During major economical crisis, processes and dynamics usually speed up and lead to great controversy amongst decision makers on how to solve the number one problem: How can we continue to sell our product and make the numbers… or even more?

The answer is pretty simple in my opinion: We can’t. People are currently buying less of anything and they certainly aren’t buying things they don’t absolutely need. They are setting priorities based on their personal financial situation and it’s no secret that their personal financial situation has not improved for the majority of people around the World in the past 10 months.

So…let’s not try to pretend sales are up - or should be up, if they can’t be. We’re seeing the first companies in the MI laying people off and blowing out product just to get cash. Major retail chains are in trouble and most manufacturers have been cutting jobs.

Of course, now is also the time leaders are talking optimism and positive vibes, which is especially de-motivating to their work force, if they are the same people who have gotten them in this mess in the first place.

However, all of this is a normal cleansing process. It happened before and it will happen again. Although, this time consequences for individuals and brands are pretty significant.

Planning is now more important than ever. Equally important is to having realistic expectations based on ‘the truth in the market place’ and what’s really going on instead of hoping for miracles. Companies get through this phase best by not having exposed themselves financially yet, still holding some sort of war chest, thus avoiding having to blow out product without making money.

I’m planning on making no plans for a while and see what’s going on after the dust has settled. I think it’s a good time to lay low and observe.

I shall let you know how things are going and will keep you updated about major changes in the Music Industry from my point of view. I’m sure there are many to come in the next 12 months.

Have a peaceful spring!

Pete