Chad M
Chief Economist & Director of Economic Research at U.S. Small Business Administration, Office of Advocacy
To Small Business Owners - how has your decreased wealth due to reduced equity in your home and in the stock market impacted your business plans?
Chad Moutray is the chief economist and director of economic research for the U.S. Small Business Administration's Office of Advocacy. He also writes a personal blog, which can be found at: http://moutray.wordpress.com.
Answers (3)
Brandon M
Owner, FVT Solutions • Tivoli/EM Consultant
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Personally, it hasn't changed a thing. My current holdings in stocks and current value of my home are treated as separate from my business and represent things that I have acquired in the past rather than where I'm going in the future. My emergency fund is in savings accounts and CD's. For my business, I am basing it on the overall economy and market demand rather than personal wealth.
However, unlike some small businesses, mine is not capital intensive. I use time, skills, and knowledge to bring in an income rather than inventory with a value add.
First of all business does not require money. It requires "System" "Goodwill" and "Network". These are not affected, so no problem.
I have not baught any shares in the bull market, so no problem with investments. I was well aware of coming recession and well prepared for the same. I have planned for recession hit market and satisfied that my assumptions are right. I have stopped purchasing since June 2008 and sold as much I could. I can recover those merchandise now in much cheaper price, thus increasing my stocks and preparing for next bull market when I can convert those stocks into cash.
Simple, knowledge is the power.
http://vardhamangems.webs.com
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John C
ROCK SOLID Business Coach : I'm the guy business owners call when they want more TRaction
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Hi Chad,
For my own business there is no impact, but I have clients with Negative Net Trae Cycles that are having difficulty funding the growth back to their old levels.
Trade Cycle
Average days in Payables - Average days in Inventory - Average Days in Receivables = Net Trade Cycle.
So if the have 30 days to pay
The product sits in inventory for 7 days and
the customers take 45 days to pay it works out to
30-7-45 = -22
Which means that they have to finance the transactions for 22 days.
It costs money to grow!
There are businesses that have positive Net Trade Cycles that are not impacted by growth, but if business falls off by 10% it makes cashflow management challenging for them. They have more difficluty when it slows down as opposed to accelerating.
To my clients it means that they either have to get the banks to play along and they are being very conservative or they have to focus on only those prospects that pay COD or close to it.
This is a real challenge especially when dealing with long standing clients as the payment terms need to be changed. Some of the clients are also having thier own cashflow issues.
John Cameron
ROCK SOLID Business Coach
