Is The Economic Climate A Wet Blanket For New Business?
Howard Segermark
I’m impressed by your website and it reminded me of a conversation I had recently with a business executive I respect highly. Our conclusion was that, yes, we’re not in an economy that has a lot of good news in it. But, there are opportunities if one works to grab them.
In the late 1800’s, New York City politician George Washington Plunkitt made a lot of money because, in his words, “I seen my opportunities and I took ‘em.”
I’ve worked in economic policy for several decades and for all the ups and downs in the economy there are relatively few variables. But some of the constants – particularly today – are more important.
The first constant is that we are still the U. S. of A. Enterprise and work and skill are still respected and rewarded. Secondly, Moore’s Law still applies: that the capacity of computer chips doubles every 18 months and their price drops in half. What that has meant is that the cost of information has been collapsing and the productivity of people who work with information – almost everyone – has been increasing. That has the effect of ameliorating the recession for enterprise. It makes economic recovery more possible and economic growth more possible.
Note the above hedge-words. “More” possible growth isn’t necessarily growth. Yet we are still in an economy that will produce $14 trillion of goods and services this year. That isn’t what it should be. But it is massive. And in such an economy, opportunities will abound.
But what about the variables? First of all, your business plan should not only recognize the inherent opportunities in America, it should acknowledge the real risks we face from Washington.
There is little attention being paid to the real prospect of inflation. The massive increase in the deficit and the Federal Reserve System’s reserves are inflationary. A recent dinner I chaired sponsored by the Committee for Monetary Research and Education featured two speakers that predicted falling price levels. Ten predicted high inflation.
Those economists and investment advisors are not omniscient. But they should not be ignored.
Thus a good business plan should not only include the usual marketing, budgeting, staffing and projected income and costs, a good business plan should also consider plans for the “uncertainty tax.” It isn’t prohibitive, but it is real. Plan for it, but don’t be afraid of it.
The other ominous fact of life is that the Obama administration is going to insist that the Bush tax cuts expire at the end of 2010. That means a real, massive tax hike on investment, risk and work. The silver lining in that cloud is that just as no one buys the day before a sale, businesses will know that the tax hike is coming on January 1, 2011 and much business activity will be moved into 2010. That means there will be more opportunities next year.
To paraphrase Victor Hugo, this isn’t the best of times but this isn’t the worst of times. There are opportunities to be taken. Find them and take ’em.
Howard Segermark, President
Howard Segermark Associates, Inc.
904 Massachusetts Avenue, N.E.
Washington, D.C. 20002
202.548.2600
fax: 202 543.3311
cell: 202.352.5229
howard@segermark.com
www.segermark.com
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