I have noticed in the last six or so weeks that the mood in the country is changing. Despite the fact that unemployment is high and predicted to move higher there has been some good news reported.
Wells Fargo predicts a $3 billion profit was the headline on April 9th. A bank that is making money, how can this be?
Goldman Sachs sells shares of its stock to pay back half of its TARP funds bailout and refers to paying the funds back as “its duty” to do so. What? A company paying back government loans – and so soon? The last time I heard this happened was when Chrysler paid back its government bailout in the 80’s. According to Lee Iacocca in his book “Where Have All The Leaders Gone” it took the government a month to figure out where Chrysler should send the check since no one had ever paid a government loan back before.
Since the stock market hit bottom on March 9th and closed at 6547, it has had almost a 25% rally closing at 8125 on April 16th. (Yahoo Finance) Doesn’t this give you the feeling that the panic is fading? Certainly the talking heads have toned down their gloom and doom predictions of another “depression like the 20’s and 30’s”. I have already doubled down on some of the stocks I own and have already begun to reduce the losses from last qtr’s investment massacre.
Whether you agree with the politics of the solutions or not, it’s tough to believe that dumping almost a trillion dollars of stimulus into the economic blender and pouring almost another trillion into the financial sector to loosen the credit markets will not have some positive effects.
Based on what I am seeing and reading it looks like we could be out of this funk by the end of the year. To many of you who are keeping up on current events this probably isn’t news but I for one am starting to believe it to be true.
So what does that mean to me as a small business owner? Well, if you had done what your mother had told you and saved your pennies for a rainy day when the sun was shining, you should have a nice little nest egg of reserve capital which should not only be big enough to weather the storm, but should be available for reinvestment back into your company to prepare for the next wave.
Our business, like many of yours, has felt the economic slowdown, but we aren’t wringing our hands over it. We have been using the breather the economy has given us to take a hard look at our business systems and processes to find ways to make them more efficient, streamlined and produce a more consistent and better quality product for the customer. I’m not talking about cutting the workforce to save money. I’m talking about actually hiring in the face of the economy and dumping some of the rainy day reserves into branding, marketing, R&D and infrastructure. One of the benefits of a down economy is that much of these capital investments can be negotiated at lower costs. When the sun comes out again, you will have positioned your company for growth and that is the important lesson for today. Even a down economy presents opportunities for those who have planned ahead.
In the next several articles we’ll talk about some of the ways you can use technology to improve your processes and position your company for growth into this economic recovery.