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Keep your eye on the ball!

Keep your eye on the ball!

There are many advantages to having dropped out of high school and having started a business at the age of 22.

Perhaps the greatest of them is the experience I’ve gained to navigate all the different cycles of our economy.

There are many entrepreneurs who have been in business since 2010 and only know of an economy driven by a bull market.

…Explosive growth driven by innovation, a strong consumer-driven economy with a federal reserve committed to keeping the markets stable through the printing of money…

That printing of money working to drive interest rates low…

We’re talking about a federal government that was willing to fund nearly every social program.

And a distribution of the printed money would go right into the hands of people who would in turn spend on consumable items like TV’s gaming consoles, home improvements, and new cars.

And then others would invest/bet in the stock market and the newly formed crypto markets as though they were playing slot machines in Vegas.

It’s been a fun and profitable ride for the entrepreneur of the last decade plus years… but like all things, this must end at some point… what goes up truly does go down.

When things reverse, they usually do so quickly, violently, and with a swing of the pendulum that is far from balanced.

We have all watched how interest rates have started to climb as inflation touches every sector of the economy.

There are nearly 11 million unfilled jobs; forcing companies to pay more wages and greater incentives to attract and keep talent.

If you are in a part of the country where real supply chain disruptions have hit your local stores and businesses, then you know how scary it can be when you go to the grocery store and there are no eggs, butter, milk, and meat; and there won’t be for a few more days…hopefully, if the truck arrives.

At the time of me writing this, the stock market has nearly lost all its gains from the lows of 2020 during the Covid lockdowns.

Luckily, so far it appears that the consumer is still going strong and has the funds to maintain their spending (to prop up the US economy) …at least up until now.

What happens when the consumer can no longer keep up with these macro and naturally occurring micro breakdowns?

As entrepreneurs, we for sure have to keep our eye on our “Main Street,” but we have to be equally vigilant about watching what’s going on on “Wall Street” and the larger domestic and international economy.

Now is the time for every entrepreneur to wake up and begin to put in place a game plan should things change in their markets, because they will likely change quickly and without warning.

Do you have the necessary funding in place should there be a disruption to your cash flow?

What’s your relationship with your bank? Do you have a low interest rate line of credit in place?

Do you have the ability to raise your prices? Have you built a business model and offer structure that would allow you to raise your rates without your clients saying goodbye to you?

Have you built a “moat” around your business that makes you a “must have” in the eyes of your customers, protecting you from competitors who will begin lowering their prices in hopes of generating cash flow?

Have you taken advantage of these low interest rates and paid off as much debt as possible so you don’t need to carry more debt than you can handle?

And if the interest rate is adjustable, are you prepared for those payments to go up?

I don’t mean to scare anyone or come across as negative.

After all, it has always been the worst of economic times that has given rise to more millionaires being created than any other time…

I myself started my first business in the recession of 1988 and another business in the financial crisis of 2008. Both became multi-million dollar companies.

I do, however, think it’s prudent that you keep your eye on the ball.

Strangely, it’s when entrepreneurs need marketing and networking the most that they stop spending money on it … this may be the kiss of death to those businesses.

I’d encourage you to make sure you take some time now to check in with your customers and see how they are doing.

It may just be that they are struggling, and you may be able to adjust your services to help them and to protect yourself from being dropped completely from their accounts payable list.

It’s a great time for you to reevaluate your own spending.

Are there some recurring subscriptions you pay every month but may no longer need?

Are there some programs or services you don’t need or use any longer?

Economic shake outs like we are going into right now – and will likely be in for the next 18 months –  are a necessary part of a good, strong, and healthy economy. They always lead to more innovation, more creativity, and more profitability.

As an investor in the financial markets, it can be a bit scary to see your retirement portfolio drop by 20% - 50%...

And as an entrepreneur, it’s scary to see long time clients suspend your service.

And then you’re left to make the hard decisions about cutting some of your own staff. But in the long run, the shakeout makes the overall economy stronger.

So, hang in there all you entrepreneurs!

Remember, a strong work ethic, creativity, innovation, and a willingness to add value will always be rewarded in any market!