Sep 062010

The United States is facing a crisis of confidence. The fundamental shifts and re-alignment of the economic base of the United States and the world are wreaking havoc on businesses, markets and governments. Uncertainty is very uncomfortable. But as a nation we have lived through uncertainty before. US manufacturers rallied in the days of World War II. As a nation, with a unified vision, we were the major player, bringing a world in chaos back to order. In the 60’s the resolve of a President and the brilliance of American engineering demonstrated that the moon was within reach. The communications systems that link the world today stem from American innovations. Microsoft, Apple, Oracle, Google, Ebay all got their start in the United States. We are a country of innovators and entrepreneurs. What the United States desperately needs now is the innovative drive and entrepreneurial spirit which is the root of American culture.

Consumer demand is based on an implicit household balance sheet and income statement. Americans in their wisdom are saving more because they are looking out at an economic horizon where joblessness may remain high, credit will be much tighter, declining housing prices have reduced perceived wealth and the value of traditional investments have dropped and continue to decline. Over leveraged consumers are prudently cleaning up their balance sheets, paying off debt, curtailing spending and in that process exacerbating the contraction in the US economy. The result is persistent weakness in consumer demand which will not fuel a recovery any time soon. Propping up the economy through supports that are focused on rebuilding this declining consumer demand may be short sighted.

The small business that employs 5 today could possibly employ 10 tomorrow with the right mix of opportunity, human capital and financial supports. The small business that employs 50 could employ 100 if business to business demand increased, the small business management team is prepared for growth and the dollars to finance operational expansion are available. It is this notion of “stepwise” small business growth that is needed now in the United States. The traditional new business growth curve has to be rethought. As a nation we cannot settle for slow small business growth. We need jobs and we need them now! Viable, scalable, small businesses must be identified and “pushed” beyond the traditional small business development growth curve toward a new Stepwise small business growth curve.

Small business owners are not optimistic about the future of the economy or their own business prospects. Many feel as if they have been left out of the largess distributed during this period of economic uncertainty. Small business owners were hit hard by the credit crunch. As demand declined, the need for financing increased to support operations during a time of business downsizing. Lenders were more selective, and the small businessperson became a casualty of government neglect as large banks were bailed out allowing Wall Street to return to its culture of excess. Unemployment benefits had no impact on small business owners, even if their business activity stalled completely. The result of the focus on unemployment payments gave the job seekers life supports while the job makers had to fend for themselves.

Climbing out of this economic downturn will require the United States to regain its global competitiveness. The US consumer is tapped out. We must find ways to open doors to the global economy. Regaining global competitiveness must be the priority. Investments in education, research, and global outreach are needed. Large multinational businesses are able to play the global financial markets to ensure that they maximize the return on their global investments. Local businesses support local economies. Local businesses with global reach will build jobs.

Hopefully, The government will soon recognize that American entrepreneurial drive, American innovation, and the risk taking nature of America’s small business community will be the basis for the economy’s recovery. Tax policies will take much time to cycle through to jobs. Investments solely in infrastructure fund old world sectors focused on US demand. Small business needs access to global demand, similar financial supports given to auto makers and banks and a White House that can inspire a new entrepreneurial wave calling forth the pent up talent of America’s young, America’s entrepreneurs and America’s small business owners. See below.

 Posted by at 7:33 am

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