What Can A Business Do? - Can they survive inflation? It's a rat race.
INTRODUCTION:
Greetings. I had a great ten days away. From time to time, we all need a break. For me this was a combination of work and time off. I had two speaking engagements in two different cities that were awesome. I love public speaking. Interacting with people and listening to the the thoughts and opinions of others makes someone realize how people perceive things differently. Each time I speak at a company event, I learn something which helps me to be a more diversified individual.
As luck would have it, my last event was close enough to where I lived in Connecticut that I could extend my stay and visit with family I have that are still living in Connecticut. Family I haven't seen since I moved to Florida in 2021.
A blessing. Sometimes things work out and fall into place nicely. But alas, I'm back home in Florida.
Most of my public speaking involves speaking at private company events. At times, as the keynote speaker, and other times as part of a speaking panel. Both are fun and rewarding. As many of you may have read in my past posts, I owed my own company for 17 years before selling it as my interest in firefighting and pre-hospital medicine grew. Eventually, making firefighting and paramedicine my new career for over 30 years.
I have been fortunate to see and learn a great deal from others and see other sides of life. Some of which are sides that most do not want to see or know exist, but they do, and these are the sadder times for so many. The side where people lose loved ones, personal belonging and property, and most things that are dear to them. Things that can never be replaced. Many times these incidents happen for no apparent reason other than they do. We only now that it is a part of life. I thank God my life experiences have made me a better person, and a well-diversified and open-minded individual. It gave me the opportunity to learn a great deal about myself, as well as the world in which we live.
About tonight's topic. I find it ironic that most people think every business is prosperous and has unlimited money, and every business obers, small or large, is rich. That is the farthest thing from the truth. At least for most. Hundreds of companies you may have never heard are making millions a year, while others struggle to survive week to week. A successful business is not based on its popularity or even it's size. It comes down to one thing. At the end of the day, small;l or larger, known or unknown, its HOW MANY ZEROS ARE BEFORE THE DECIMAL POINT?
THE EFFECTS ON BUSINESS:
Businesses in general, and sat times, specific businesses are effective by our present economic state. The choices our government makes does not help. Many large companies have reported large losses each quarter since inflation has been on the rise, and is slowly becoming out of control. A situation that was predicted a while back, yet government spending and expenses continued to rise. Our leaders were NOT listening. Large corporations are reluctant to raise prices for their consumers for fear that people will not spend. Should that occur, it could result in workers being laid off due to reduced sales, which results in reduced profits.
Hence, the unemployment rate rises eventually rises creating a great government expense.
These companies are caught between a rock and a hard place because either way, whether cost increases due to transportation and fuel prices, or a reduction in sales, they lose profits. One or the other has to give. Lose of jobs, increased costs, will undoubtedly bring on a form of a recession sooner if this current situation is not rectified. Most of these are public-owned companies whose stock values affect their stockholders, and stockholders do NOT want to see the stock price going down. This effect also effects the everyday people whose retirement income relies on the stock market. I am sure many remember the last time we faced this reality and people lost their life savings by demissing 401k's. The chart does not represent profit, it represents the rise in the cost of good and services.
A privately-owned company faces the same issues but does not have stockholders to report to. That said, the privately-owned companies, at least on the surface, have a closer attachment to their workforce, probably because they are smaller in size with less staff. This was my case. I had my business during a recession. It was not easy by no means. Many times I thought I would not survive it, but we did. It took a great deal of planning and taking some risks. I felt a great responsibility to those that worked for me since they relied on their paycheck to pay their bills. Smaller companies look at laying off people seriously because they know their employees on a more personal level. They know the financial situation this would cause for their workers.
As you can see, it gets a bit complex, and like a rubber band that is stretched to far, eventually, it breaks. Something always has to give. As many have seen, the costs of goods in every store have started to rise. Some products more than others. I asked myself, as should you, where are the regulations?
For example. our government is assisting in destroying the American farmer by the number of products such as imported beef. As consumers, we do not know where the meat in our stores that we are buying came from. Why? Because the government does not regulate the fact that the country of origin is not required to be on the package. Personally, I think it should be. Maybe I want to support the American Rancher, and most should. We all should be supporting the goods that are made in the great U.S.A.
I ask myself, why, as a nation, is our present administration not supporting the AMERICAN FARMER OR RANCHER? In addition, as consumers, shouldn't we want to know or have the right to know where our food is coming from. Other items are marked MADE IN CHINA, or TAIWAN. Actually, most items you turn over at look at the bottom marking or box label, you would find are made overseas. We hear of all of this on the news daily. However, frankly, not enough people take it seriously. Do not mistake what I am saying. Global trading is important to global economy. However, not to the point of hurting American businesses. It is hard for American business to compete becuase they don;t manufacturer the volume of good that we import. It's difficult at best, for them to maker it cheaper, or even at the same cost.
Another example would be the farming land in our country that we have sold to other countries. What we have sold to China is a perfect example. Now, what rocket scientist thought that was a good idea? You just handed control of that land and whatever it produces and placed it in the hands of another country. A country that one day could use that against us. As a nation, we are quickly losing the independence of the resources produced by other countries that we once had when different administrations were running our country. We are slowly becoming too reliant on goods and energy sources from other countries. Goods and energy sources we are capable of producing here. We also know we can produced oil products cleaner than any other country.
How does the administration think that is helping climate change? We outsource much of our technology to be made in China. As I stated, global trading is essential and healthy, but not when a large portion of a part of your industry and growth relies on another country. We preach to Europian countries NOT to be solely dependent on Russian wheat and oil, yet, we are not practicing what we preach.
DOES THIS ALL SOUND FAMILIAR?
It should. We hear about it every day on any cable news station, even if the story is twisted from one network to another. Although people know this, taxpayers pay a large portion of these costs and no longer rarely reap the benefits of reduced pricing. Of course, the government has many other sources of income, such as tariffs on imported goods etc. However, this goes much deeper than the time allotted in a basic blog post. Books have been written about this. This is not made up. This is reality and fact. Our country was founded and built by immigrants. I welcome them into our country. However, properly. We have an immigration system that needs to be fixed. But the way it is happening now with open borders, is not the way to fix it. Who will support them? Their medical costs, housing, food, children, etc.? We will, the taxpayer, which is not fair when we are all already facing tremendous financial burdens. Not to mention the sex trafficking, drug trafficking, and illegal weapons entering our country. Every bad thing that can come from this action is rising: crime, overdoses, deaths, and more.
Yet, we continue to allow it to happen. It's not politics anymore. It's politicians personal agendas within their political party. Politics is only the tool that facilitates this to occur. What happened to the trust? People do not trust the government anymore. Ask yourself, do you trust our government?
Stuck in the middle of all of this are businesses. They suffer from looting during non-peaceful protests, higher taxes, and trying to balance their budgets. The internet has hurt many brick-and-mortar stores and caused many to go out of business. Book stores are a perfect example. Some significant companies closed their stores and switched to online buying stores only. That hurts tax revenue for the particular city they were located in. Cities and towns rely solely on their tax base income. When that gets reduced, it will eventually cause some loss or reduced city services. Programs get cut, and in most cases, it's programs that are needed. Can we afford to reduce services such as police, fire, and EMS? Aren't these services critical to people's lives?
Ladies and gentlemen, this causes a domino effect. An effect that goes far deeper than what we see on the surface. Our lives are busy, and most of us go non-stop from morning until we go to bed. It's common to think that things will get better and go to sleep. They probably will, at some point. But how much worse does it need to, or will it get before it does get better? Depending on your opinion, you may believe this administration will fix it, and others think it will not. Their track record so far is NOT impressive. In almost every area where statistics and data are collected, things have gotten progressively worse. This leads to a recession. The only question is when?
THE STRUGGLE:
Tonight's topic is; "What Can A Business Do?" For each business, the answer is different. However, for every business, the fundamental first step is cutting costs. Some costs are controllable, and others are not. It would be nice to see people get higher wage increases since we have an inflation rate well over 8%. However, whether there is a bargaining unit or not, and depending on whether it's a contract negotiation year, increases will be less than expected. That certainly does not help the average worker. However, it does help to secure their jobs. At times, our priorities need to be evaluated.
The second essential step is to evaluate the products you are selling. Unless, of course, you are a manufacturing company and only deal with one product. It's a double-edged sword. First, importing the product is cheaper than buying it locally because it is more affordable. As a nation, we do a horrible job of being able to make things cheaper in the US. Even with reduced transportation costs because it is made in America, the labor rate in other countries is so much cheaper than ours, that it is still cheaper to import the product. Therefore, the second essential step is to import more. Consequently, we further hurt our nation's economy and become more reliant on other countries.
Are you seeing the problem yet? To solve one problem, businesses unintentionally cause another. It is a matter of survival. Past administrations made it more lucrative for companies to manufacture their products and stay in our country. We were bringing back American Business. Now, we are losing that battle again. People blame the businesses. You cannot. You must blame any administration that does NOT support the companies. Small or large. The farmers, the ranchers, etc. By doing this, they would also be supporting the American worker. More Americans working means more tax income for the government.
The third essential step is proper fiscal management. Not only for businesses, but for local, state, and federal governments. Sound fiscal management is a must in any economic system. Using and putting your resources to proper use in the right places is also a critical element. I believe everyone agrees we need cleaner energy sources. I think nuclear power is the most intelligent answer but needs further refining. Electricity, wind, and other sources will NEVER transition in the time frame this administration wants it to happen. It's impossible. First, most people cannot go out and replace their cars. Over 70% of families are already living paycheck to paycheck. Wind and solar power in themselves are not refined.
Further, too many problems are associated with wind turbines, such as freezing when it is cold for long periods, and when there is no wind. You can not produce wind. In addition, we do not have the land available, which now would probably be non-taxable income land, to erect the number of solar panels necessary to generate the electric needs of a nation? Once again, this administration, in its infinite wisdom, contracts companies in China to make more solar panels when we could produce them in our own country. China is a country that we also do not know if we will be in an economic battle with over Taiwan. Does anyone think for a New York city minute China will not use the economic leverage they now have over the U.S. and are gaining more? So much for energy independence.
Alternative energy sources are smart things to look into, but will never be ready in ten or fifteen years. The total transition from fossil fuels, which I also believe we cannot go without for many more years, will probably not, in my lifetime or yours, totally be ready. It isn't like a light switch. One moment it's on, and with a flick of a switch, it's off. In these areas, businesses have little control and are stuck in the same situation that we are. However, the result for them is much more tragic. They close, go out of business, and lay off workers.
This is why businesses and manufacturers lobby Congress. Spend insane amounts of money to secure their future. A future that our nation should be looking for and finding a way to support. The bottom line is that businesses do not have many choices. Almost any choice they make to survive will hurt someone. That someone will most likely be the consumer.
"I'm sorry" doesn't fix the problem. It is nice to know they try, but contrary to popular belief, their hands are equally tied in many places. For example, how many of you watch Shark Tank? I always found it to be an interesting show. However, when an entrepreneur who developed a new product tells the sharks it's made in the USA at a specific price, the first thing they are told is, you can get it made overseas for half that price or less. That is certainly not the fault of the SHARKS in the tank. They are investing to make money. They are only stating the facts.
That is perfectly normal and acceptable. However, what does that do for American businesses? If China ever stopped making the electronic parts for us, which is something they can always hold over our heads, half of the personal electronics we own, computers, T.V.s, cell phones, and much more would not exist. Who in their right mind puts all their eggs in one basket? The only saving grace is that for China to do that would certainly mean a big blow to their economy. That is the balance that everyone hopes will keep that from happening. However, we have learned from the war in Ukraine that nations are taking on other alliances. They are slowly becoming independent from what they buy from the U.S., and we continue to become more reliant on what we buy from them. I can't speak for you, but in my view, that is a recipe for disaster. It's like playing musical chairs in a fixed game and you know you will be the one that has no chair to sit on when the music stops.
IN CLOSING:
Are there answers? There are always answers. The question is, are we willing to do what it takes? Is the administration willing to admit they were wrong on specific changes, and would they reverse them? Understand that every problem has a solution. It's whether are not we like and will implement the solution. Unfortunately, we have an administration that will not admit that their plan was too aggressive and mistakes were made. Our President has made it clear he will not reverse anything. Therefore, we as people and businesses will be facing some enormous challenges.
A scale works best when it's in balance. Unfortunately, the scales of our times are grossly tipped, and right now, NOT in our favor. It is said that things always get worse before they get better. I ask you, how much more of worse can you take? Our national debt continues to skyrocket. The feds are trying for a soft landing to avoid a major recession. Interest rates will continue to rise in an effort to slow down and reduce inflation. Spending needs to stop.
The housing market boom of the last two years will also come with a price. In a recession, those home values will drop. Remember back in 2008 or so? There were more foreclosures than the banks knew what to do with. For every action, there is a reaction. For every choice, there is a consequence. Sometimes we can project what they will be and prepare for them, and times like now, no one in power listened to what the effects of their choices would be. Now the consequences are upon us to face and are building. So what's next?
Stay safe, be happy, and be well,
Caesar Rondina
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