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| Dear Mark,
The bulls and the bears are
lining up; there is a lot of growling, but there
is no conviction. The bulls aren't buying
into the rally and the bears aren't shorting when
the market declines. Economic signs aren't
fantastic and ideas from over a year ago about a
possible double dip recession are whispering
louder every day. A second wave of the
recession and its destructive powers could be on
its way for a lot of small businesses.
Banks just released their
second quarter (2010) earning and the profits were
high. But they came from accounting entries
instead of the good old fashion way of earning
them. They had excuses, too, stating loan
demand was falling. That's not what I've
witnessed by any means. We have seen a demand
for finance, but banks unwilling to lend. It
makes you wonder what they are really up to!
The small business environment
continues to stay challenging. I believe we are in
the eye of the storm. Opportunity is around
and we, as responsible small business owners, must
take advantage and close business deals
immediately as well as continue to build our
financial position. Immediate action is
necessary before the eye closes and the storm
returns.
As always best wishes,
Mark Wyssbrod, CPA
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|
Preparing For The Second Wave!
Tips To Survive a
Potential Double Dip
Recession |
|
 Is the economy recovering or
faltering? Well, it depends what industry
you are in, how large our business is and if you
are unemployed! No matter how your business
is running you can always have improvements.
The following improvements can help build your
financial position and help prepare you for the
next economic challenge.
Lock In Low
Interest Rates If You Are A Borrower!
-
Interest rates have continued
to decline you can take advantage by locking in
the lowest rate possible and the longest
time period possible.
-
Avoid purchasing long-term
assets with low fixed rates. You can purchase
short-term assets and wait for rates to
rise
Unemployment
-
Use this time to review your
staff and staffing needs. Can you use the high
unemployment to attract better team members at
reasonable pay levels to your company?
-
Focus on sales areas where
customers have stable employment or small
businesses which depend on Fortune 500
companies
-
Avoid consumer discretionary
and small business dependency
Review Your
Business Plan & Strategy
-
The economy continues to be
volatile
-
Create a written business
plan and strategy
-
Revise the plan and strategy
on a regular basis - mold it to the economic
environment
Focus
On Efficiencies
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Fall Forecast
Interesting Time To Predict The
Economic
Environment |
|
 Interest rates fell when a
lot of economists, including me, thought they
would rise. The European banking crisis and
a weaker economy are just two reasons for the
lower rates. The lower rates could be around
for longer than we expect, indicating the economy
is weaker than is reported in the news. The
biggest winners of lower rates are the
banks. Lower rates allow them to make more
monies in the short-term since they have lower
borrowing costs, but the rate at which they lend
has not been reduced. Additionally, as rates
are lowered assets which higher fixed interest
rate are worth more.
My fall forecast is a stabilizing and boring
economy. GDP will grow at less than 2.5%; if
it grows faster than that wait for them to revise
it downward at a later date. Additionally, I
am still concerned with long-term inflation,
however in the short-term we have several
deflationary pressures. The deflationary
pressures and unemployment (no significant signs
of hiring) draws me to conclude interest rates
will remain low for the rest of the year.
Too bad the loan requirements are changed so
frequently almost no one who needs a loan will
qualify for one at these low
rates! |
|
| IRS Circular 230
disclosure: To ensure compliance with
requirements imposed by the IRS, we inform you
that any U.S. federal tax advice contained in this
communication (including any attachments) is not
intended or written to be used, and cannot be
used, for the purpose of (i) avoiding penalties
under the Internal Revenue Code or (ii) promoting,
marketing or recommending to another party any
transaction or matter addressed
herein | | |
|
Financial Ratio of the
Month - Inventory
Days
The Inventory
Days (ID) is a measurement of the amount of
inventory in days you have on hand. If you
are a business that works with inventory, this
will be an important ratio for you to follow. The
ID equals
(Inventory/Cost
of Goods Sold) X 365
Generally speaking the lower the ratio
the better (i.e. you are managing inventory
effectively). However, too low of a ratio could
indicate you do not have enough product on hand to
meet demand.
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| Contact Information
11770 Haynes Bridge
Road
Alpharetta, Georgia
30009
phone:
(770)
664-8583
fax:
(678)
762-9413
web:
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