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In the 14th century the bubonic plague was responsible for an estimated hundred million deaths across Europe, or 30 percent of the worlds population. Over the course of a hundred days in 1994 an estimated 800,000 citizens were murdered in Rwanda as a result of political infighting. And over the past four months Pittsburgh Pirates fans have watched their team lose more games than any other team in baseball.
Sure, business owners are deeply concerned about rising deficits and the prospect of higher taxes. Yes, were uncomfortable with the future effects of health care reform. Of course, were struggling to manage and generate profits in an environment of flat demand. But were not fleeing the Nazis or hoarding bread while an army of Normans lay siege to our city. Were not under occupation by a foreign army or being forced to convert religions.
And most of us are lucky enough to not be living in Pittsburgh either.
Things arent great. But theyre not terrible. In fact, theres actually some good news for managers of small businesses.
For starters, theres a change in the political winds. I dont question our Presidents motives or good intentions. But over the past two years his administration, with Congresss backing, has spent an unprecedented amount of money and created massive deficits. Most Pirates fans wont find this as bad as the Aramis Ramirez trade. But these policies have unnerved the small business owners I know and have caused many of us to hold back on hiring more people or making capital investments.
Two things will happen for sure this fall: The Pirates players will be watching postseason games from their homes, and the Republicans will gain back significant seats in both the House and Senate. Our forefathers created a system of checks and balances for a reason. One political party running roughshod can only result in mischief. This should slow down legislation and hold back the spending.
Speaking of spending, did you know that the Pirates only pay $400K to Charlie Morton, arguably one of the leagues worst pitchers (1-10, 10.03 ERA at the time of this writing Morton has thrown 46 2/3 innings and allowed a whopping 75 hits, 52 earned runs and 13 homers). Thats peanuts compared to others.
I wish I could say the same for our government. A trillion dollars has been spent on (arguably) one of the worlds worst stimulus plans. That aint peanuts. Even so somehow, someway, the Federal Reserve has managed to keep interest rates and inflation at historical lows. This is good news too. For those of us able to borrow, money is cheap.
We can lock in at low, low rates. And although were not earning much in our savings accounts, we can take comfort that the value of our cash is barely declining. We can hold back on significant raises. We can keep our prices in check. Unlike our counterparts trying to make a buck in hyperinflationary places, we dont have to consider inflation and interest in our business dealings right now. Which means we have a little less to complain about.
But, like Pirates fans, small business owners like to complain. Some still like to complain that theyre unable to get financing as they could a few years ago. Thats not something to complain about. Having a losing record for 18 seasons in a row is something to complain about. I say it was too easy to get financing a few years ago. Due to recent reforms and the overall public mood, todays banks are lending less frequently and putting their potential customers through the kind of due diligence that they should have been doing in the first place.
Theyre asking for financial statements, checking up on credit history and getting more involved in their customers affairs. And this is a good thing. Bankers are making more responsible loans. Theyre not allowed to make as many risky investments. Theyre back to banking. And small business owners who qualify are only getting the financing that makes sense and not overextending themselves. Too many business owners in the past 10 years were given too much free money and found themselves in dire straits when they realized they couldnt pay it all back.
High unemployment creates pressure on the government and reduces consumer demand. But it also creates a buyers market for business owners looking to hire new people. I recently advertised for a part-time marketing assistant on Craigs List and got over 200 applicants. Why, even a few players from the Pirates applied. So thats good news for a business owner.
There are plenty of smart people out there looking for jobs. I havent heard a business owner complain about a tight job market in years. Now, if you need an experienced worker, you just go out and find one. And if youre spooked by health care reform or the governments spending and dont want to bring on another employee, you can just have your existing employees work more. Theyre terrified of losing their jobs and are happy to take on the extra responsibilities.
Even the things that we cant control seem to have stabilized too. The stock market continues to hover around 10,000. Thats still almost 30 percent below its historical high, but at least were not hearing about huge lopsided losses unless the Pirates are playing the Brewers. Judging by corporate profits, which have been strong this past quarter across most industries, the stock market will most likely continue to rise. And now that our economy has cooled down, so have energy prices. Rising gas and oil prices are no longer in the headlines and probably wont be for a while. At least until demand starts heating up again.
And demand is definitely heating up. Certain economic barometers are telling us this for certain. Rail traffic is much higher than it was a year ago. The Baltic Dry Index, which measures shipping activity, has also significantly risen. Key commodities are higher. Retail sales are on the upswing. Consumer confidence, at least for those consumers who have money to spend, is up. Savings rates are higher. Big companies like General Motors and AIG are paying back the money that the government lent them as demand has returned.
Why, the economys so much better that Pirates management may even consider raising ticket prices again!
And no matter whos bashing the U.S.A. this minute, lets all face reality: There are too many investors in this world who would much rather sink their money into the American economic system rather than risk their funds in countries run by dictators, Communist regimes or corrupt bureaucrats. And when that next big idea hits (energy? health technology? mobile?), new industries will be created, new markets will rise, and thousands of business owners will benefit. The Pirates will still suck of course. That goes without saying.
See? Things arent great. But theres plenty of good news out there. And business owners know it. That doesnt mean we cant complain. But at least most of us can be grateful our baseball teams arent as bad as the Pirates.
Gene Marks, CPA, runs a 10-person technology consulting firm in Bala Cynwyd, Pa. His latest book is In God We Trust, All Others Pay Cash: Simple Lessons from Smart Business People.