Congress is Taking a Cut of your Profits

Nancy Pelosi thinks the GOP is causing more unemployment.  Yup she does!  Democrats have the power, they have the votes, they can do as they please and yet she blames job losses on the GOP because she thinks they stalled the vote on unemployement extension.  Okay, first off unemployment goes to the unemployed, and not to the working people, and has nothing to do with jobs unless you believe people are quitting their jobs to get unemployment.  How is this lady so incapable of reasoning simple truth and yet in a position of power?

All of this is very damaging to business owners.  Unemployment has the effect of competing with business owners, especially small business since it creates a way for some employees to quit their job and still cost the previous employer money while they take a break and look for the next serial opportunity to collect unemployment from another employer’s insurance. 

Business owners need more control over payroll, benefits, taxes, hiring and firing, and application of their hard earned cash flow.  The government is slowly taking away the benefits for employees from the employer and at the same time reducing the benefits of being an employer.  The government is truly taking a big cut of the earnings of small business even when they don’t directly call it a tax.  All these rules and regulations and controls are in fact a tax on business!

If you own a small business which is now required to hire a third party accounting firm to audit your books, then that cost is a tax on your business.  It isn’t called a Tax but is, and it comes out of the earnings of the business just like a tax.  Even if you deduct the expense you can’t deduct the whole amount so your cash flow drops just because congress emposes the expense.  These rules and regs are expanding and impacting more and more businesses.  If it continues this reverse trickle-up method of siphoning off profits toward the taxing authority of the US will strip the benefits of being an employer to the point where it will cost Americans their standard of living.  Hello Russian standard of living… in the US.

It’s Friday! Not my favorite day for buy/sell

Friday’s are correctly referred to as Freaky Friday in Disney movies, although they are referring to an inter-body experience.  In this case, watching business markets on a Friday can be about the same.  It’s funny how it can go one way, then another, then another, and simply not do what’s expected.  Although Friday is freaky it is also a good day to set up Monday which is usually not nearly as freaky. 

I usually avoid business decisions on Friday and focus more on weekend decisions like which brand of golf ball to use or which amusement park to take the family too.  Every now and then a decision on which angle to cast a fly is appropriate as well.

Negative Economy, Positive Stock Market

Yes, this can happen.  The economy can continue to post lower numbers and the markets move higher.  Why?  The reason is simple.  Companies are run for profit, most of the time, and the people running those companies must find ways to make money even in hard times.  Sales may rise, stagante, or fall but if they trim enough overhead internally these companies can post higher earnings.

In recent cycles, since the year 2000, companies have had to learn to be faster at creating positive numbers by controlling expenses more quickly and ahead of downturns.  It makes sense that some large corporations will do better at controlling costs than what we became used to during the 20 years prior to 2000.  Cutting overhead includes putting people out of work, taking them off the payroll, which also makes the unemployment rate climb.  It is a catch 22, almost… since it can have a positive outcome in the long run.  In the future these companies making good net earnings will later hire people again, and quicker, as the economy becomes more positive. 

It’s all part of the same long cycle.  We should be greatful for our system because the downturns in the cycles are much shorter than they are in other countries.  In fact, we should be worried about how much congress is changing our system and limiting free trade and capitalism.

Are You a Business Pilgrim?

Increasing Business: In site of it all…

This is the time to act, the time to be productive, the time to move ahead in the world, when it appears that everything is contracting, it is in fact time to expand!

 The first question you might ask is how do we expand if nobody is buying, and of course that does make it more difficult.  Let’s imagine a couple of things that can help us have hope for the current future and the business climate we are in. 

 First, imagine that it is the early years in America and you are a Pilgrim.  You are newly arrived to this continent and you must survive.  The Indians have been helping you with corn and fish but now you need other things, like firewood, salted meats and supplies for the coming winter.  Because you are not producing anything of much value and the natives and your neighbors are not trading as much, things look bleak as you begin to realize you could starve!  What are your options?  You need to quickly come up with more and better goods to trade or you need to expand the number of customers for what little you have to offer.  If you have money you can buy goods, if you are healthy you can manufacture something (horse shoes…).  The hard part would be expanding your client base since everyone walks or canoes, and since they like to live a little too far between villages.  So you better get to working hard or you will starve. 

 Since it isn’t the days of the pilgrims and since we do have more options today, we should take full advantage of them as quickly as possible.  What better options do we have?  Internet, phones, cars, planes, trucks, trains,, radio, television, and more, and we even have multiple options for those items.  Unlike the pilgrims you have multiple ways to communicate, transport, deliver, service and represent your business to many people very quickly.  The trick is to take advantage of all the free ones plus spend a little on the paid services to be sure you hit the best possible cross-section of potential customers or clients.

 I was about to write a description of the steps you need to take to expand your business in this environment but why tell you the same old story again?  You already know what to do and you just need to make sure you have the attitude that this is an opportunity to expand rather than an opportunity to hope to make it through the winter.  So take advantage of all the technology you can since the larger companies are definitely doing so and you don’t want to be left behind.