Wednesday, November 12, 2008

Business in the new great depression

OK, I am a small business owner. My firm employs 6 people and we service about 125 customers all over New England. I was very interested in the presidential election from a standpoint of what impact the choice would have on my business. I want to let you in on a few facts of how the economy works from the prospective of small business which collectivly employs over 15 million Americans (More than either the government or the big companies) and is in reality the best hope for economic prosperity. Now I'm not rich, my wife and I both work. We don't worry about money too much and all our bills are paid. I want to let you know what it will take for my company to expand (Yes increase my income) and allow me to hire more people.

I don't worry too much about economic downturns and even recessions. There is opportunity in every situation. You can't sit back and just let things just happen to you. My company continues to grow even in this "crappy environment" because we have moved into business sectors that are have more resilience to bad times, medical and automation. As work forces shrink there is higher demand on technology to complete the work. This is an opportunity, if the bottom doesn't fall out I can ride it down and then be in a fine position for the upturn. If you are worried about your current economic future have a few beers, think about your industry and identify opportunities that arise when things get bad. One of my fathers favorite quotes " Chance favors the prepared mind" let that sink in for a few... Back to what this country needs to do to create jobs.

There are 3 types of people (I am not counting the ones who are so rich that no matter what happens they always have money, Honestly we spend too much time talking about them politically and their numbers don't amount to anything. You could take away all their money collectively and you still wouldn't have enough to run this country for a month. (I hope to be one of them some day)

The 3 types

Those that that work - For the most part these people rely on the current economic situation to guarantee their employment. If times are good they have have a job and are well paid. If times are bad they get laid off and wait/look to get hired again. Look around your workplace. You will see them and hell, you may even be one of them. This is a good percentage of our workforce. You can do whatever you want to help them but it won't create a single job or expand the economy one little bit. Their biggest enemy is handing them cash when they are out of work because it saps any incentive they have to find another job. We all have the capability to become this person. I know because I fell into that trap once, I'll explain. I was let go once, it was during a big economic downturn. I had a nice little side business brewing so figured I would just make that work. I am a go getter kind of guy so why not. Well I had to make ends meet so I decided to file for unemployment. I filed online (No embarrassment of having to go to some office and stand in line) and low and behold a nice check showed up that Friday, 13 more to come. Wow this was great, it actually covered the base expenses. I decided to sit back and relax for a bit, enjoy this down time. Well the checks kept coming and I kept relaxing. It got close to check 10 and I decided time to get off my butt and get some income flowing. 2 Days after that decision I got a letter in the mail. The federal government is extending all unemployment benefits for 52 weeks. You can take one guess at what this did to my motivation to work. It was the kiss of death. Needless to say this only derailed the start of my business for a year or so. Now I am not "live on the public dole" kind of guy but let me tell you. Easy money does strange things to you. If they had just pushed me out the door after say 8 weeks I would have been fine.

Those that get work done - These are the employees that are not necessarily career orientated but who are efficient and know what it is they want to do and how to get it done. They are innovative and adaptable. These people will never have trouble finding work and staying employed. Don't worry about them too much. If they loose their job they will probably never file and will be working before you know it. If things get really bad they may need some help but chances are they have a support network to provide that until they get on their feet again.

Those that make work - These are the people who start and grow businesses. You may live next door to one. They seems pretty well off and but not flashy. Under that they are very much risk takers. If you were to have a conversation they would probably reveal that they threw their entire financial future on the line in hopes of building something. They are also willing to take risks in order to grow, risk that average person will never take.

It is the last group that will get us out of any economic downturn. Until they feel comfortable enough to take risks no one in group 1 will ever find a decent job. Group 3 doesn't need a hand out, bail out, or anything else. They need an environment to flourish in and that environment is not one where we tax him to death and give his money to group 1. I don't want to get into a huge philosophical discussion about wealth distribution or anything like that. I want the economy to grow again and I'm telling you how that works through the eyes of someone who employs people.

So what we need to do is encourage small business owners to take risks. The more we talk about raising their taxes or forcing them to up Heath Care contributions the less risks they will take. I am in a holding pattern on my next hire because of the future uncertainty. My business is still showing growth but I have this nagging feeling that things could go the other way. Change my mind and I'll create a job or 2.



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