I would like to
take this opportunity to balance my bullishness (as I believe some read
ers
believe my bullishness is to the extreme, which it is not). Do I
believe the first 4-6 months of 2012 will be a good environment for
small business? Yes, but please do not mistake my short-term
bullishness for a final resolve. We are not out of the woods yet. As a
matter of fact, we may only be 1/3 of the way through the global
deleveraging process which is occurring.
Picture: 2012 Might Be A Wild Adventure Or A
Scary Ride - Depending On Your View
So if 6 years is
1/3, my view is we are in the beginning stages of an 18+ year bearish
environment. Now is the time to strike as opportunities exist,
primarily due to many businesses owners spending their time complaining
about items they cannot control instead of looking for profitable
ventures.
Solution:
In the good economic times, business owners must use their after-tax
profits to build liquidity, build working capital, reduce debts, retain
equity in their business and invest in operational improvements. This
requires sacrifice, mental and financial discipline as well as creative
thinking. Reality Check - so far very few small businesses are doing
this, which will set them up for continued frustration in the future.
Professional
investors are feeling this way too. Dave Rosenberg and Bob Farrell of
Gluskin Sheff (an investment bank) shared their belief with Barron's
(the December 19th edition, Words of Wisdom by Alan Abelson) of being
in a 12 to 20 year secular bear market which will only end when asset
prices are around a price-to-earnings ratio of 8 (really low).
Solution:
You may not be able to control your asset values (stocks, home,
business, etc.), but you can influence your net worth by controlling
your debt levels. When you reduce your debt, you know what your return
on investment is (the interest rate). However, the volatility of owning
an asset you cannot control the value of can be mentally challenging
and frustrating!
Additionally,
certain global issues may cause unrest in our economy or worse, cause a
major shock. Such events may include, but are not limited
to a military conflict with Iran, oil supply shocks, failure to
form Democracies as a result of the "Arab Spring", civil war
in Iraq or North Korea, irrational behavior by business owners,
manager, consumers and politicians, and political rhetoric during
an election year.
A
Reset In The Value Proposition
It appears as if
the economy is resetting compensation balances between industries and
skill levels. A few years ago, a blue collar assembly line worker or
any construction worker had the potential of earning over $100,000 a
year. During this time, white collar, college graduates' earnings
potentials were about half. In today's environment, the blue collar
compensation has significantly corrected and white collar wages have
fallen a little or have stabilized. Who is making money in today's
environment? The money makers are the creative thinkers providing
timely creative solutions.
Solution:
Are you complaining about your business environment or are you thinking
creatively for solutions? The reset in value proposition would suggest
more attention to creative thinking!
Managing
Attitudes
During this
volatile economic time we as business owners, managers and leaders need
to keep our attitudes in check. We cannot allow our frustration and
stress to spill over to our team members and hurt morale. Additionally,
our attitudes appear to becoming very volatile as well. The signs I am
seeing indicate this is not healthy for us. It is also letting us get
unfocused and stress about issues we cannot control instead of focusing
on the solutions our business needs and can control.
A
Quote from The Past Might Apply Today
"When a
culture begins to feel threatened by its own inadequacies, the majority
of men tend to prop themselves up by artificial means, rather than dig
down deep into their spiritual and cultural wellsprings." The
saying is by Dr. Martin Luther King, Jr. regarding the civil rights
era. However, I believe you can apply it to business owner's mindset
today. Dr. King informs us of the solution; to dig down deep into our
spiritual and cultural wellsprings (i.e. focus on positive, creative
solutions).
