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The National Association for Business Economics has declared the recession over. Really? Do you share my desire to take some of these economic theorists on a walk through your real world?
A few facts undermine the good news:
- The rate of job losses has slowed, from 750,000-plus per week down to 500,000-plus last week. However, that number only counts workers eligible to apply for unemployment insurance. Many people are not eligible. During October, 5.8 million people received unemployment benefits. The ‘official’ unemployment rate is 10.2 per cent, while the ‘real’ unemployment rate edges toward one-fifth of the U.S. work force. The last time official unemployment exceeded 10 per cent, it was 20 months before net employment gains began to be realized. If that pattern repeats, we’ll see net employment gains in the third or fourth quarter of 2011.
- Value of the U.S. dollar hovers near half the value of the E.U. euro. It is Obama Administration policy to ensure a weak dollar. While this is helpful to U.S. companies that export goods, it doubles the cost of imported goods – from European Union countries – for Americans. And it makes travelling to Europe cost-prohibitive for many.
- Legalized corporate gambling, with credit default swaps and other risky derivative products, continues. The difference: Now major financial institutions can gamble using taxpayer-provided funds rather than dubious financial instruments backed by mortgages or automobile loans that are supposedly secured by payments from qualified purchasers. These are the same speculative practices that brought the worldwide financial system to its knees in 2008. No government regulations have been established to stop it. Greed has not diminished. (See my column, The Credit Crunch: It’s Not a Subprime Problem.) To place a single slot machine in your convenience store in Nevada, you would be subjected to far more rigorous regulations than if you want to engage in high-risk trading of derivative financial products.
- Cost of medical care and the lack of affordable health insurance will not improve in significant ways for small businesses, based on health insurance legislation now being considered in Congress. Because the Obama Administration lacks substantive business experience in its inner advisory circle, their policies and programs consistently fall short of what is needed to provide actual help to small businesses. They pay lip service; they don’t deliver.
Where does this series of disturbing facts leave you, as a business owner? You’re unlikely to receive any understanding or assistance from this merry band of politicians, whose pockets are lined with insurance and financial industry contributions. And White House theorists apply academic concepts to the anti-theoretical world of revenue generation, customer service, profit, and losses, as unemployment rises and consumer spending remains constricted. How will our Republic survive the assault of the dreamers and takers? The solitary voices of honest brokers – the would-be ‘fixers’ – echo hollowly with ignored, practical plans.
As a person who prefers to focus on positive and inspiring ideas, accepting this messy mire upsets. However, knowledge can increase power. Based on these potential scenarios, here are business actions to help you triumph:
Job losses continue; net gain in Q3 or Q4 of 2011
Find products and services that appeal to customers with reduced spending power, and those who curtail spending to better prepare for a financial crisis they hope they won’t face. Plan ways to keep current customers and broaden your base.
Weak U.S. dollar
Diversify into goods from non-E.U. countries. If possible, stock U.S.-produced products. Make these American-made items a point of pride and focus, as a positive addition to your mix rather than a detriment required because the value of the dollar has plummeted.
Danger of another banking debacle
As always, I remain a fan of financially stable community banks and credit unions. While another banking crisis could occur, establish a firm relationship with a local financial institution, committed to helping local businesses succeed. If another credit meltdown occurs, you need a banker who will partner with you and provide the credit you need to move your business through challenging days.
No health insurance relief
Find a large national professional organization you can join to access health insurance plans. You may need to look at related professions rather than your specific expertise. It’s likely you’ll pay a few hundred dollars for annual dues to maintain membership. That cost will be minuscule compared to the cost of insurance as an individual or a stand-alone small business. Some readers have established inexpensive offices, costing less than $1,000 per year, in another state so they can qualify to buy insurance, which is not available through national professional organizations in the states where they live. Since the alternative to no insurance can be a choice between death and bankruptcy, finding a way to purchase health insurance is essential.
Ongoing difficulties and potential pitfalls are not what any entrepreneur wants to contemplate. However, it’s far better to be prepared than blindsided. And fortunately, the Internet provides rapid access to information you can use to make the best decisions for your business and your life.