The Business End

Now might be the best time to start a new business.

I have talked to a number of individuals who have been thinking about starting a new business over the past year. Starting a new business in a great economy is still scary much less if companies are failing all around you. I personally have found that the old saying is true: “What doesn’t kill you makes you stronger.”

There are a number of market fundamentals that are showing signs of recovery. In the past I have been overly optimistic and just because you want things to improve does not mean they always will. I am looking at a number of factors that lead me to believe we are on the road to recovery.

What’s changed??

As much as many of you would like me to say it was/is the Obama Administration, I think that had a role to play but all credit can not simply go there. Take into consideration that our previous bustling economy  had plenty of money.  Most individuals have very little financial education and as a result they overspent. Combine that with the fraudulent practices of those in some of our biggest companies. It was a recipe for disaster.

It had to get worse before it got better. As such, we saw some of the most stable (or what we thought were stable) banks in America crumble right before our eyes. No doubt this is what our grandparents saw in the dawn of the great depression. Thankfully we had people who had studied the Great Depression in great detail and planned accordingly. As it turns out we all own 34% of the world’s largest bank.

Now don’t read this yet thinking we are out of the woods. Think of it as we were falling at terminal velocity and now we are just happy that we found our parachute. Meaning, we are still falling as the new unemployment report today shows. We are just not falling as fast. Last week we were told that GDP was at -1 from -6. Folks, thats STILL BAD. I feel that it’s just been such a crappy market that we feel any glimmer of positive news is good.

Take all of this gibberish I just pooped out on this blog and throw it on the wall to see if it sticks. I think now is the time to be bullish on the market. When I say market, I mean all you MAIN Street guys not you WALL Street guys. (I’ll save the wall street talk to a later post.)

If you are a Main Streeter then I suggest you get your butt moving and make it happen. Get your business up and as consumer confidence creeps back up you will see slow and steady growth. If you are growing even at at rate of 1% that’s still growth! Chances are if it’s a slow growth then you have less volatility.

Most of you will want to start businesses out of some sort of emotional passion that you have had. Maybe you have always wanted to start a Bar or a Wine shop or a Restaurant. Before you do, analyze what the rate of return is on that business and how consumer confidence will affect your model. Also look at your business competition and get an idea from them if this is something that is cyclical. How will you survive on the valleys? Do you have enough liquidity to push thru to the other side?  Sadly, most don’t because they made their decision on an idea that it would be “COOL” to have this business. Just make sure that it’s a true need and you are doing something clearly different than everyone else.

If you figure out all these details then I am sure that you are on the right track. I think history will soon repeat itself because we have not solved the core of the financial crisis. FEW PEOPLE HAVE FINANCIAL EDUCATION! If that is you then I suggest you do something, even if it’s just reading a book. Einstein said: “compound interest is the greatest invention of the 20th century.”

Perhaps its still will work in the 21st century? If you were going to get something moving, I would start now. Just my $0.02. So as it happens again remember as people get more money in their pocket books, they will no doubt spend at a faster rate. Hopefully this latest cash crunch has taught us all a lesson both on the public main street sector and even with the big boys in wall street.

ORIGINAL POST: www.mckane.com/blog

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