The news has been deafening these few weeks for investors, individuals, the world, and we small businesses. Deafening and frightening. The unknown is enough to dampen the best of spirits, and the waiting game will kill us. The volatility for no reason except for panic about Europe (and perhaps the fiasco that is the U.S. Congress?), has done nothing to ally our fears.
Kraft Foods spent $19 billion to buy Cadbury PLC last year, and now it’s splitting in two. It is scaling back the merger of a high-end luxury item with every-day lunch meat to better compete in the global economy. Meanwhile, ground turkey is infected with salmonella and killing people. And, that behemoth Google is purchasing Motorola Mobility (yes, that kind of money is alive and well in this stinkin’ economy).
Banks are now going to charge huge-scale investors a fee to stock pile large sums of cash apparently pulled from the too-risky financial markets. Shall we small businesses be following suit? Do rich investors know something we don’t? But, too much cash is not what banks want; in fact, they have to pay interest on that and with the truckloads of greenbacks pouring in…that means money is going back out.
Individual investors have money stuck in the markets, and we’re subject to the high risks of the fluctuating volatility. Where else shall we put our money? The FDIC only insures up to a certain limit, and not all vehicles, money are insured! If a bank goes belly up, and you have more than the insured amount sitting in the bank, you lose (the traditional amount is $250,000). In our lifetimes, we need to have eight times that amount to comfortably retire. Can any of you say you’ll make it?
Shall we buy gold? It’s a bit too late with the price sky high (now trading at $1600+), and you can bet people ran to melt their gold jewelry for an instant fix. Stories are all over the news with families forced to trade in family heirlooms and wedding rings.
Shall we invest in real estate and hope the market turns? Real estate agents have been saying “there’s no better time to buy a house than right now” since 2006 believing the market to be at bottom, but they don’t really know. How about investments in rental units? Apparently, rental vacancies are low in some regions, like near military bases where there is higher need.
Our financial advisors have never seen markets like this, so they tow the company line and say “ride the wave, you’re in for the long term!” Except, the graying of America has 50 percent of the nation’s population suffering from the demise of their portfolios. And, the wild ride is expected to remain volatile through 2013, say economists.
I knew with absolute certainty the market would crash again; I rode the wave and the uptick felt good for awhile. For young peeps with the income to consistently invest, the markets are still something to consider. With the global economy now dictating market fluctuation (something the U.S. markets were not affected by eight years ago), no one can assess the health of their portfolios by looking at the U.S. economy only.
What does this mean for us small business owners?
We hire contractors; we hire service vendors; we purchase technology and services to run devices; we service clients; and we manufacture and sell products. Jobs? Yes, we create jobs, but these may not be full-time positions. What if our clients look to saving money and decide not to need contract work or decide to forego partnerships that have been in place for decades? These are the questions small-business owners are faced with in light of the current debacle that is the U.S. economy and economic future.
While the news of late has been oriented to banks not lending to small businesses, the news today is that small businesses don’t want to add to their debt burden without comparable or higher sales to offset the debt.
This roundup all came from one day of news stories in the Wall Street Journal. I’m a bit un-nerved for the first time about all this and wonder today about filling the queue for the coming year. We’ve been through a recent recession that we never really came out of healthily, but this time? We’re royally screwed, and I encourage small businesses to shore up and brace for the worst. It’s going to be a long haul, Friends.
SteelToad says
It’s never as bad as you think it is … because it always surprises you when it gets worse.
Take a third of the countries workforce, and send their jobs somewhere else.
Spend the money you have, and the money you don’t have waging wars.
When the banks fail, give them all the money you can to get them going again.
When the banks are running again, allow them to keep their money instead of lending it out.
Refuse to replenish your own country, while pouring money into other countries.
When the country relies on leaders getting along, elect leaders who openly refuse to do so.
There is so much, that has been done so wrong, by so many, for so long,
that it should be of little surprise that we have such a mess on our
hands.
What does it mean for small business owners, the same as it does for
anyone else who doesn’t already have enough money set aside to survive
till things get straightened out … struggle and hope.
Soulati says
Thank you for letting me draw you here, Ray. Great seeing you and I miss you! I’ll figure out SMB Collective soon — need to redesign; meanwhile, perhaps I ought to run one blog and mix the themes? What do you think?
Sigh. Struggle and hope — it’s all we have left, isn’t it?
Haroun Kola says
Scary and exciting times ahead
Soulati says
I agree, and we’re hoping to get beyond the scary faster.
Erica Allison says
Great roundup here, Jayme. For the first time in my life, I’m sad to report that I’m not optimistic. Truly. I’m ALWAYS optimistic, but just don’t feel it right now. You’re right; we’re in for a LONG haul. Best to brace.
Soulati says
Yes…best to brace, Erica. Kiss the babies.
maryhruth says
I get spooked quite often, as well. Maybe the best thing is to focus narrowly on today, this moment. No thought for the future. Then things can begin to seem rosy again.
Or, another way to say it, I wonder if our problem is about faith – in ourselves, in each other. If we stop second-guessing and take stock of right now, maybe faith can return.
For instance, the economy is screwy for sure and things are looking scary, but there you are, @Soulati:twitter , making solid sense and being a real human. So we could be worse off.
Soulati says
I see my iPad2 swallowed my comment back to you. Thanks for giving a vote of confidence in my direction, Lady! When things get all wicked strange like this, I try to focus inward and on my family. We can gain strength from making that our focus, too.
T. Shakirah Dawud says
Thanks for being real, Jayme. Hmmm. There’s a lot here that talks on a collective scale, but it’s all due to the sum of our individual efforts or lack thereof. Ray says we should struggle and hope, but that’s pretty much what life has been about all along. There’s nothing particularly optimistic or pessimistic about that, but we can always view it through one or the other pair of glasses anyway. I’m the kind who will see the silver lining as tarnished as it may be. I think some of our struggles will awaken us as individuals, and I think there’s evidence it’s happening in business and society. We’ll see what comes of it together.
Soulati says
At the end of the day, all we can control in life is ourselves, right? It’s daunting and a journey. Those who are up for it will continue to grow and excel. Thanks for sharing a few thoughts here, Shakirah.
Shonali Burke says
I’ve been thinking about all this as well, and occasionally feeling much the same as you. However, I see a lot of organizations reaching to independent practitioners right now. It’s almost as if they realize that, though their budgets may have been cut, and they may have had to let a few people go, they still need the work done… so a contractor is the solution. These are certainly troubling times, but I think we just have to figure out how to get by… right?
Soulati says
Absolutely, Shonali, and thanks for coming over to add your thoughts. My business thrives during a recession; always has. We’re the best answer to FTEs or agencies, and while it’s a buyer’s market, quality is the ticket to get through.