President Obama Misses Mark Again, More of the Same

 

Sept. 9, 2011

President Obama is proposing superficial  bandaids from political motivations that would accomplish little to solve the structural economic challenges afflicting the U.S.

America’s economy is barely holding together by pins and needles. It could tear completely apart with one more catastrophe. With its $447 billion plan, the Obama Administration has proven again it does not know how to stimulate growth in jobs. If the administration gets its way, a double-dip recession is inevitable — not economic recovery.

Yes, I’m all for roads and education. But I’m troubled. Why? My sense is that the administration is making recommendations for political reasons, and not economic patriotism. More on that later.

U.S. business has too little domestic demand for products. The list of concerns is long. America is no longer a manufacturing center. Television sets and computers are made in Asia. Cars and trucks aren’t selling.

Many big companies like General Motors are investing abroad and making more money there. Yes, ask GM about cars sales in China.

All of this means a stalemate in domestic job creation.

Extend unemployment insurance?

OK, 14 million Americans are jobless. Not to sound unsympathetic, but many workers are partly to blame by not adapting to the new digital age with new skills. There are countless unfilled jobs.

At what point does a helping hand become a handout?

Recessions weren’t kind to me. Long ago, my personal situation helped coin the phrase, corporate downsizing – 14 times. Yes, 14 layoffs. Yet, I always found ways for a sustainable income. It wasn’t always in my preferred industry. Sometimes, I turned to other sectors and got a sales job and worked my way back into management.

As a former mentor, famed broadcaster Del Sharbutt, once bluntly told me: “Every experience is a learning experience.” Reading between the lines, he was also telling me mental toughness was in order. What I eventually learned was that I needed an entrepreneurial spirit. Despite all the jobs, not to be gauche, but a CBS executive referred to my resume as a “rich background.” His comment spurred an even more intense entrepreneurial conviction.

That’s what America, American workers and the Obama Administration need.

The straw that stirs job creation – small business – can’t get credit and enough customers. Studies show most is not hiring nor will they for at least 18 months. Why? Again, there’s too-little domestic consumption.

Family budgets are strained. U.S. consumers are spending more but it’s more precious dollars on food and gas. Both are heavily imported. There isn’t any new drilling for oil and natural gas. So much of domestic consumer money is going abroad but it isn’t returning as a result of exports. The trade imbalance is still way out of whack.

Disingenuous spending

President Obama is calling for more stimulus spending. He apparently thinks spending another $140 billion on roads and schools will work. But my sense is that his proposal is aimed at benefiting the unions for political donations (see this EDITORIAL: How labor unions spend dues money).

Mr. Obama is showing he does not have Bobby Kennedy-like qualities (note this revelation: Dirty work between Obama, Teamsters). Do you recall the administration of John F. Kennedy when his brother, Attorney General Robert Kennedy, had his principled legal fight with the Teamsters in the 1960s?

Meantime, the president proposes to finance his proposed new stimulus with cutbacks in Medicare and Medicaid. It’s fallacious reasoning to think it’s best to spend more for union construction jobs while healthcare workers will lose theirs.

We already know about the devastation caused by his healthcare law. The majority of small businesses are apprehensive. Their workers and all patients face higher costs in their copayments and coverage.

Launching an infrastructure bank to lend money to local and state governments and financed privately?

Please. Government budgets at all levels are stretched too thin, as it is. Government credit ratings are backsliding. Doesn’t anyone remember the U.S. downgrade?

To expect these governments to repay the money isn’t productive, just as businesses fail when they borrow money just to stay in business. At some point, they have to repay the money, or else.

President Obama wants more business regulation – more government bureaucracy. Again, talk to the majority of businesses. You’ll get an earful.

He wants to tax the wealthy at higher rates. So how will they invest and hire workers? What’s their incentive to spend? The hospitality industry – from hotels to restaurants – is barely making it now. Sticking to the wealthy might make some people feel better, but it’s not a solution.

Payroll tax cuts won’t stimulate job growth and are a threat to future Social Security recipients for their retirement. The short-term benefit would be catastrophic for the long term.

There are more red flags, but you get the idea.

We waited weeks for President Obama to outline a new public-policy approach for economic recovery and job creation – in vain.

What we need is common-sense leadership and change from the White House, not politics. Remember the campaign promise? But nearly three years later, are we getting it? No, it’s more of the same politics. There’s no infrastructure being proposed for short-term or lasting recovery.

From the Coach’s Corner, instead of just complaining, this portal’s Public Policy section is filled with solutions.

“The problem with the federal government is that common sense is not necessarily common.”

- Terry Detrick

 

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Terry Corbell is a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

Tech Planning: What If There’s A Double Dip?

 

Pick any region. Most respected economists and other experts believe economic growth will be tepid, at best. There are continuing concerns about the world’s economy, and it’s important to ask a key question: Are you ready for a possible double-dip recession?

Certainly, many global economic trends are eye-opening. Here in the U.S., job-growth and the consumers’ inability to buy are major concerns.

Moreover, public policy at all levels – federal, state and county, and city government – is hurting the nation.

At the federal level, stimulus spending that totals more than $1 trillion has been inefficient. Relatively few jobs are being created and there are constant calls for more spending. Policies are detrimental. The healthcare reforms are anything but productive. The legislation created 19 new taxes, it lacks cost-controls, and insurance premiums are mounting.

For years, state and local governments have been fiscally dysfunctional, too. They are still increasing taxes and slashing services.

Businesses are disappointed. Many lack an incentive to invest in human resources, marketing and technology.

The aggregate impact: A further deterioration of Americans’ financial and political freedoms.

So, it was not a surprise that technology-research firm Gartner recommends in a study that chief information officers should get ready for another downturn. That requires planning.

Authors of the study, Plan for a Second Recession, Now, wrote: “We urge these CIOs to leverage their recent experiences by preparing their enterprises should another economic downturn occur within the next 12 to 18 months.”

Gartner believes it’s important that CIOs communicate closely with senior company executives on priorities. Which IT projects for the next 18 months could be postponed or even disregarded?

My sense is that very function or project should be comprehensively studied and any spending should be approved. The budget needs to be detailed and every item needs to be justified. That’s called zero-based budgeting.

Just to cover all the bases, your department’s finances need to be constantly reviewed.

If your company is in dire financial straits and is attempting a financial turnaround, it’s also important to understand the perspectives of both the senior executive and the chief financial officer.  There must be a daily review in the form of a flash report. A flash report can be designed to monitor indicators on a daily basis and to evaluate your actual performance against the turnaround plan.  For more reading, see Step-by-Step Solutions for a Company Turnaround.

If a poor relationships exist between IT and the finance department, which is often the case, it’s important to understand the CFO mindset. You might want to read: Tech Trends: CFO’s the Boss, IT Departments Are Disappearing.

Good luck. Start planning and strap in the proverbial seatbelt if the roller-coaster ride proves to be harrowing.

From the Coach’s Corner, if you’re thinking about getting into business for yourself, I’d recommend reading: Eight Strategies to Consider Before Starting A Tech Business.

Not convinced about economic conditions? Here’s an eye-opening headline: Gartner Trims Worldwide IT Spending Growth Forecast to 3.9 Percent.

Secrets to Success in Recessions: Expand Marketing

Authoritative research and the five lessons I have learned about marketing and recessions in my 30+ years experience.

 

Authoritative research continues to show businesses are self-destructing when they cut back on marketing in downturns. If implemented and evaluated properly, marketing creates a return on investment in multiple ways.

More on that later. Meantime, suffice to say recession or not, a good marketing approach requires intensity and is based on thought leadership about every facet from social media to internal company communications. And marketing, of course, includes strong public relations.

If anything, maintain your marketing investment and expand your PR efforts.

Sports provide great metaphors for business. As in any sport, remember this basic principle: Write a great game plan and attack…attack…attack.

Actually, I was prompted to write about this topic again when I enjoyed reading a commentary by award-winning public relations expert Devon Blaine in the blog of a strategic financial consultant, Joey Tamer.

Ms. Blaine provided documentation on why it is unproductive to stop or trim marketing during a recession.

“Though this strategy might seem to make common sense, recessions are times that call for uncommon business wisdom,” wrote Ms. Blaine, president and CEO of the The Blaine Group, Inc. in Los Angeles. “Recessions reward the aggressive marketer and penalize the timid one.”

In other words, timorous businesses forego an opportunity for niche leadership and to expand their market share.

Authoritative Study

Ms. Blaine cited a noteworthy study, “Advertising & Marketing During An Economic Downturn,” by David Stanley of Industrial Equipment News. It analyzed the situations of more than 1,000 manufacturers in what’s called “Profit Impact of Market Strategy” (PIMS).

Far too often, studies appear to be self-serving for special interests. But this study, www.tinyurl.com/lokgyd, is objective and unique. It is from The Strategic Planning Institute in Cambridge, MA, which describes itself as a non-profit membership association that promotes “strategic business management.”

Actually, The Strategic Planning Institute, www.pimsonline.com, originated as an internal planning project at General Electric. Then, from 1972 to 1974, it evolved into a Harvard Business School project.  

The PIMS study concluded that bold marketing in a downturn resulted in strong performance while tepid marketing had undesirable consequences. In addition, the higher marketing investments did not hurt profits for the short-term.

1990′s Study

“Penton Research Services reports that shortly after the 1990-91 recession, Coopers & Lybrand, in conjunction with Business Science International, surveyed CEOs from growth companies about the effect the recession had on their profit growth and the actions they had taken in response,” cited Ms. Blaine.

So what were the conclusions from the second study?

“A strong marketing program enables a firm to solidify its customer base, take business away from less aggressive competitors, and position itself for future growth during the recovery,” she concluded.

Incidentally, I am very familiar with the capabilities of Devon Blaine, www.blainegroupinc.com, and Joey Tamer, www.joeytamer.com/blog. You can take the bank anything they write or say. We are all members of Consultants West, www.consultantswest.com, a roundtable of veteran consultants that meet regularly in Los Angeles.

Again, I agree with Ms. Blaine. Having experienced five major economic downturns in my career, I know there is one inescapable fact about marketing and recessions. Companies that view marketing strictly as a percentage of their budgets miss opportunities for growth. Successful companies look at the short and long-term ramifications.

During downturns, good companies that cut marketing budgets soon learn they do not retain dominance in their marketplace, and they will learn they have lost market share once the upturn begins.

From the Coach’s Corner: Not to be redundant and to add to Ms. Blaine’s points, in my 30+ years experience, here are five salient lessons I have learned about marketing and recessions:

1. A quality company that maintains stellar marketing in a recession succeeds. But it is imperative to continually evaluate the company’s marketing return on investment.
2. If a company does not provide enough value or is a substandard company, marketing does not help them. This has been true in all industries – from the auto industry to law firms. So this means taking a sober look at the value of your company’s products and services.
3. A recession is a terrific opportunity to take a big picture snapshot of a company. It is important to look a client’s total situation – such as in human resources or pricing – and come up with solutions.
4. The best companies are proactive about planning and execution in good times and bad. Many companies show poor judgment about pricing and cost-cutting in marketing. It is unproductive in a downturn to slash prices in a knee-jerk fashion. A better approach for a company is to continually test marketing ideas – always be on the offensive. Automatically slashing prices without assessing the competitive landscape can undermine your brand’s value, and make it difficult to successfully raise prices later.
5. Companies that cut marketing investments fail to sustain their “Top-of-the Mind Awareness” and unnecessarily lose revenue in the recessions, and they endanger their profitability when economic conditions improve. Indeed, it takes more resources – time, energy and money – because they have to work too hard just to re-establish their brand.

21 Tips on How to Start a Business in a Recession

 

Conventional wisdom probably indicates a recession is not the best time to start a business. But if you have ever dreamed about it, there might be good reasons why the seed to start a business in a recession was planted in your mind.

Good ideas are worth a lot of money, especially in a recession. Many successful companies were launched in economic downturns. They range from General Electric to Hewlett-Packard.

A recession can be a good time if you have a great idea and have entrepreneurial instincts. Entrepreneurial personalities do not let fear run their lives.

Think of fear as an acronym: Frantic effort to avoid responsibility. Entrepreneur-types see a good idea as a responsibility to act. Plus, a recession motivates them to work harder and smarter on developing and executing their ideas.

True, consumer confidence is down, home foreclosures are increasing and the business climate is tepid.

As many companies cut back, new business opportunities appear. But you’ll have to hustle. Successful entrepreneurs do their homework and work as hard as dedicated athletes who train for high performance. Yes, there are numerous pitfalls for startups, and it will probably be the most difficult undertaking of your life.

Here are the 21 tips on how to start a business in a recession:

1. Pick the right niche. You’ll need to enjoy your work and be passionate about it in order to succeed.

2. Take baby steps. Strategize now while working at your present job. Don’t quit or wait for a layoff. If you’re out-of-work, money is problematic but you might not have a choice. Consider all your options.

3. Develop your vision. Write a one-page vision, which explains where you will want to be. Then, consider a business plan for a roadmap. Do your research and become an expert in your industry. Know your competition.

To determine where you are business-wise, conduct a SWOT analysis to assess your strengths, weaknesses, opportunities and threats. Some firms then develop and implement a strategic plan. A business plan is a management tool vis-a-vis a strategic plan, which is a leadership tool.

This also means learning accounting techniques, forecasting your cash flow, and considering buying good bookkeeping software.

4. Seek expertise. Read about successful entrepreneurs. Look for a mentor and a qualified sounding board.

Also, contact a Small Business Development Center. The organization has countless offices throughout the country.

Here’s the link: http://www.sba.gov/aboutsba/sbaprograms/sbdc/index.html

5. Get a head start on marketing and selling. Line up customers before you launch. Always remember: Cash flow is paramount.

You might want to read my column, “The Seven Steps to Higher Sales,” http://www.bizcoachinfo.com/archives/27

6. Market and sell every day. Establish a marketing budget and stay with it. Many companies lose market share by cutting advertising and promotion. Implement strong public relations.

Make yourself known to your local public officials and news media. Suggest to reporters that they consider interviewing you when they want an authority in your niche. Look for ways to multiple sales with your customers.

Consider networking with larger companies – many outsource to micro-businesses.

7. Make customer service a priority. When customers take their businesses elsewhere, my research shows 7o percent of the time it is because they feel taken for granted.

Practice great customer service for referrals and repeat business. Survey your customers. When a customer pays you a compliment, ask a question such as this: “What are the names of two people just like you who might appreciate my company’s services.” Be sure to follow-up with the referrals.

If you plan to free-lance or become a consultant, consider my “60 Ground Rules for Effective Client Service,”  http://www.bizcoachinfo.com/archives/106

8. Harness the power of the Internet. Learn blogging and search engine optimization techniques, and how to develop online press releases. A strong Web presence is paramount.

9. Line up your resources. Seek references from trusted associates for a good accountant and lawyer. Plan your policies and procedures. Learn to manage your books.

10. Arrange your financing. You’re unlikely to get a bank loan without a track record. Besides, it’s more economical to use your own resources and start from scratch. Avoid reliance on credit cards and home equity.

If you are seeking investors, consider another column I wrote: “What No One Tells You about Raising Investment Capital” in an interview with leading consultant Joey Tamer: http://www.bizcoachinfo.com/archives/1177

11. Appearances matter. Look professional – pick a good business name, logo, memorable tagline, and a branding-benefit statement that adequately tell your story. That also means quality business cards and stationery, a Web site, and email address using your domain name.

12. Understand legal requirements. That includes business license and taxes at the local, state and IRS. If you’re planning to hire employees, check with your appropriate state agency.

13. Consider buying a micro business. Avoid buying a company that’s losing money unless you’re certain you’ll succeed. Consider proposing owner-financing in a leveraged buyout. But do your due diligence. Walk away from a prospective seller who shows even a hint of bad practices.

14. Develop backup plans for equipment and operations. You’ll never know when bad weather or misfortune will strike. Fortune favors a prepared mind and business.

15. If you plan to hire employees, learn best practices in human resources. Hire the best workers, who demonstrate the 3 A’s – attitude, appearance and ability. (Note a good attitude is most important.)

Motivate them to be productive and to make your business look good in the marketplace.

16. Location. Just as in buying a home, there are key points to remember about where to locate (scroll down to the last paragraph for a link).

17. Keep sources of inspiration handy. Bone up on slogans and quotations to keep you motivated.

18. Community service. In addition to your regular routine of hard work, recreation and exercise, you’ll find it gratifying to devote time, talent and/or money to a worthy cause to lessen the misery in your community.

19. Network and join your local chamber and industry associations. Develop relationships and become a spokesperson for your industry. Become known as the “go-to” person.

And get involved in public policy when events adversely affect your industry. Government agencies are not known for enhancing or even protecting entrepreneurs’ economic and political liberties.

20. Budget time for continuous improvement. It’s vital to regularly reflect on your business and how to evolve in the marketplace. Review your SWOT analysis annually, and fine-tune your planning.

21. Remember to play and rejuvenate your mind. That means you should exercise, engage in your hobbies and do whatever works for you to stay mentally healthy.

Again, if you start a business, it will be the hardest thing you will ever do.

Yes, it’s a lot of footwork. But if you start with these rules, you’ll enjoy a competitive edge.

From the Coach’s Corner, to help you determine your entrepreneurial capabilities, here’s a link to a Small Business Administration site:

http://www.sba.gov/assessmenttool/index.html

For more insights on starting a business, I was honored when New York Times columnist Brent Bowers featured me.

Here are links to the columns:

•  ”Been There… Done That… Here’s How”   http://www.nytimes.com/2008/02/26/business/smallbusiness/26hunt.html? _r=1
•  “Advice on Taking an Entrepreneurial Leap” (including tips on where to locate a business) http://www.nytimes.com/2008/03/26/business/smallbusiness/26hunt.html

Need a Job? The Recession and Offshoring Don’t Have to Be Obstacles

 

Updated June 2, 2010

All eyes are on Germany as the possible savior in the woes of the European Union’s recovery. Germany was the first to enjoy a growing gross domestic product. But Germany is eyeing budget cuts – billions of euros. Possible cuts include defense and higher sin taxes. The goal is savings totaling €10 billion or $12.22 billion.

Economists’ eyes are also on the U.S. GDP, a basic measure of the nation’s performance. But the U.S. recession will not be officially over until we get a definitive word from the National Bureau of Economic Research. Not to be negative, but you might recall the official determination about the current recession was late – not until December 2008. That was a full year after the bureau’s economists realized the recession originated 12 months earlier.

During those 12 months, many on Main Street were already reeling from the effects of the severe downturn. Profits were harder to achieve, especially for retailers. Advertising budgets were cut. Autos and trucks weren’t selling well as consumers became more tight-fisted with their money. The situation was exacerbated when big banks and credit card companies started cutting credit lines and imposing stiff fees in undesirable usury practices.

If you’re a boss planning your budget and workforce, it is certainly best to consider more than a macro-view of the economy. For an accurate snapshot, use discernment in the micro factors directly and indirectly affecting you. Listen closely to your customers.

That also means: Don’t be fooled about many companies exceeding earnings expectations on Wall Street during the recession.

Candidly, times are not necessarily good if those companies are merely cutting employee hours or laying-off workers and slashing costs to achieve profits. Profits created by stagnant wages adversely affect consumer confidence.

If you are a non-exempt employee – just like senior management – you should be aware of these issues. Higher profits do not equate with strong employment prospects, either. So, even if the GDP gets in the black, we still might not be in a true recovery.

What else should you do? Stay positive and passionately do your best to help your company make a dollar. And if your company lobbies government in the political arena, find why. It just might be to create an environment conducive to competitiveness.

Offshoring Job Losses

Many Americans have either been under-employed or jobless as the result of offshoring jobs, too. Just as automation replaced workers a few decades ago, look for innovation and productivity to increase as companies cut costs.

A study by The Conference Board and Duke University shows the number of offshoring U.S. companies dramatically increased from 2005 to 2008 – 22 percent to 50 percent. What’s more, 60 percent of such companies plan to increase their offshoring.

Business has complained for years about too few Americans having degrees in science and math. The lack of talent and innovations in speeding products to the marketplace are the catalysts for the increase in offshoring.

No matter how you are impacted by offshoring, you will want to read the comment by the report’s co-author on The Conference Board Web site, www.conference-board.org.

“Outsourcing innovation in engineering, research and development, product and software development, and knowledge processes makes companies, whatever their country of origin, more competitive by increasing speed to market and compensating for domestic talent gaps,” wrote Ton Heijmen.

The report also states the shortage of American talent has prompted many small companies to offshore jobs. And the talent is not limited to China or India – talent is being utilized in Brazil, Egypt, Sri Lanka and Russia.

Conversely, many economists say jobs are coming to the U.S. as a result of the offshoring phenomenon.

“That is, the world sends more service sector jobs to the US than the US sends to the world, where the jobs under discussion involve trade in services of computing (which includes computer software designs) and other business services (which include accounting and other back-office operations),” wrote Richard Baldwin, a professor of International Economics at the Graduate Institute, Geneva on www.voxeu.org.

VoxEU.org is a portal established by the Centre for Economic Policy Research, www.CEPR.org.

One of the reasons for offshoring is competitiveness – due to a lack of economic and political liberty – a condition imposed by the federal and state governments. (For Northwest readers, see: Analysis: Steps for Economic Success in Washington State.)

Consider this statement on the Web site of the nonpartisan Tax Foundation:

“Currently, the average combined federal and state corporate tax rate in the U.S. is 39.3 percent, second among OECD countries to Japan’s combined rate of 39.5 percent,” wrote Scott A. Hodge, president of the Tax Foundation, www.taxfoundation.org.

(Thirty countries belong to OCED, Organisation for Economic Co-operation and Development, www.oecd.org. It was formed in 1960 for a “For a stronger, cleaner, fairer world economy.”)

Among his other conclusions, Mr. Hodge has a stunning assessment: “24 U.S. states have a combined corporate tax rate higher than top-ranked Japan.”

So here is the bottom-line:  Undeniably, many Americans have suffered hardship as a result of the recession and offshoring. However, remember the U.S. will soon come out the recession and we are a vital part of an evolving dynamic global economy.

The best approach has always been the free-enterprise system. Embracing change is the only productive option for individuals to enjoy success.

The road to economic success will be easier if governments stop their heavy taxation. Instead, economic wisdom and best practices should be their goals.

Economic and political liberties are vital to the success of this nation – the effectiveness of economic policies depends on whether government has economic wisdom. That means allowing for economic and political liberties.

As I’ve written before: “Economic liberty is the freedom to make decisions in a free-enterprise system. Political liberty is possible when government stops its unproductive practices so entrepreneurs can have the necessary tools to create jobs and take full responsibility for their successes or failures.”

From the Coach’s Corner, if you are out of work or under-employed, it is time for an assessment of your strengths, weaknesses, opportunities and threats. Consider a career that offers more value to an employer or learn business-startup skills if you want to be the big boss.

For more insights on how to cope with offshoring of jobs, you might want to read the writings of Michael T. Robinson, the creator of www.careerplanner.com. I agree with his approach.

Visit: www.careerplanner.com/Career-Articles/Offshoring-Jobs.cfm.

If you decide to launch a business, don’t be surprised if you become more aware of the need for economic and political liberty.