Many of the newly minted Super Rich are completely unfamiliar with the names on the boutiques that line Madison Avenue or Bond Street

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What Do You Do When The Forecast is For a Category 5 Hurricane? What do you do when the forecast is for a Category 5 Hurricane?  My answer is simple:  Prepare and create a Survival Plan for you and your business. Now this advice may not be applicable to some of the global titans of luxury.  You may remember that following Bernard Arnault's optimistic speech at The International Herald Tribune Supreme Luxury conference in Moscow last December I wrote that perhaps it doesn't rain on the LVMH side of the street.  And judging by the financial results I see from LVMH, Group Richemont and PPR, I think I could make a good case that their heavy investment in creating a global footprint and near 100 percent brand awareness for their "flagship" brands has put them out of harm's way. For many others I am not so sure.  The stream of market soundbites I keep hearing for the US - and now the UK market - should give pause to small to mid-size luxury businesses.  A quick sampling of the barometric pressure building (or dropping in the case of hurricanes): Americans have already lost $2 trillion in home value, with predictions that another $2 trillion will be lost, according to the CEO of JC Penney. American homeowners are heavily leveraged against the falling value of their homes: 34 million American\ households (more than half who own homes) have borrowed against the value of their homes in the past four years, according to Peter Yesawich, chairman of Y Partnership. Henry Paulson, US Treasury secretary, warned of "more bumps in the road,'' saying, "It took time to build up recent excesses and it will take time to work through the consequences. Citigroup sounded a bearish note on the US consumer business, according to a Financial Times report, saying that "further losses were likely as consumers fell behind on credit card and loan repayments."  CFO Gary Crittenden told Wall Street analysts that the slowdown and housing crisis could "result in significantly higher credit (card) losses in the remainder of the year". Merrill Lynch's new CEO John Thain said last week, "Consumers were just beginning to feel the impact of higher food and energy prices," and that "we haven't yet seen the full impact on the real economy."  Mr. Thain believes the worst could be yet to come. General Electric's "miss" on earnings forecasts spooked investors as the conglomerate's problems spilled past its financial service divisions into healthcare and industrial businesses. Jobs at auto dealers hit an eight-year low, according to Automotive News, and "the only argument you'll get from (dealers) is whether this is the worst business climate dealers have faced in 20 years, 35 years, or ever." 74% of those surveyed by PARADE Magazine said they have had to make sacrifices over the past year to make ends meet, including: 68% curtailed vacation plans 67% cut back on dining out 52% put off home improvements 34% stopped buying designer clothes 32% stopped buying jewelry 80% of the PARADE group said they have "nothing or little left" after they pay their basic expenses, and 41% said if they get a tax refund they will pay off debt. 70% of the economists from The National Association of Business Economists, economists from major companies, said they are "more pessimistic" now than January and for the first time in over 20 years more said their company margin are declining than those who said they were increasing. 34% of the PARADE survey said they are concerned "they will lose their job". Unity Marketing's Pam Danzinger reports that past and planned spending on luxury by her Mass Affluent survey sample (mainly under $200,000 Household Income) are at record lows. Ron Kurtz and his AmericanAffluentResearchCenter just released its Spring 2008 report which surveys the wealthiest 10% of U.S. households (about 11 million).  The findings were not pretty, showing historic lows in plans to make major purchases, with categories such as jewelry and international travel taking big hits.  Fifty-five (55%) percent of respondents said "they had reduced or deferred expenditures in the past 12 months and would continue to do so." The only bright spot was seen in Households with at least $6 million Net Worth, and there was still considerable weakness among this group. The Prince & Associates/Elite Traveler survey released about eight weeks ago showed that the safe harbour will be those consumers with a Net Worth of at least $30 million.  While lower segments will still buy, they are both "trading down" and taking longer to make major purchases. I have several Wall Street Journal alerts that send me emails about the latest financial news, and not only are many of these prefaced with "lowest in 17 years" or "worst in 30 years," but I actually saw a housing-related statistic that made a comparison to the 1930s. Last week I spoke at The Luxury Marketing Council in Dallas where Chapter CEO Richard Baker had assembled an engaged group from locally based corporate members such as Bombardier Flexjet, Skyjet and Neiman Marcus to top local car dealers and clothiers.  After giving my Category 5 Hurricane warning, I was surprised to hear from one attendee who was at an American Express Publishing conference the week prior in California that despite the many dire forecasts, Amex was trying to paint a bright picture, even though its own credit card division has made a $450 million provision for bad debt with cardholders. As I stated, if the company name on my business card is Cartier, Gucci or Louis Vuitton, I would be apt to sing a happy song.  However, when you consider that 90% of today's Super Rich are self made and some 80% of these folks have made their money in the past decade or less, the basic fact is many of the newly minted Super Rich are completely unfamiliar with the names on the boutiques that line Madison Avenue or Bond Street (in fact, a Harrison survey from the Amex conference reported that kids of the Super Rich had a greater knowledge of luxury brands than their parents). As spending by those aspirational consumers that drove the sales of entry price and mid price point products has pretty much dried up, the key, I believe, is to create an intense program to cultivate more business from the Super Rich - both current customers and new ones. For smaller and medium size companies, I would strongly suggest an Action Plan to ensure that the folks who still have the money (the Super Rich) have your brand top of mind as they go shopping.  Remember, 80% of the Super Rich ($30 million +) in the Prince survey said they will actually increase spending in 2008.  Hopefully it ends up an Action Plan, not a Survival Plan, but my viewpoint is the indicators are that the storm is pretty big and dangerous.  With luck it won't be a direct hit, but it would also be extremely foolish to ignore the mounting warning signals. By Doug Gollan Elite Travel