Economy 9 17 2009


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Economy 9 17 2009

  1. 1. A Difficult Economy What Should We Do? Asa J. Beck, CPA President, Cogent Strategies, LLC Member of Policy Committee, Coalition for a Prosperous America Cogent Strategies
  2. 2. What is Happening? <ul><li>The economy will improve, it will be bumpy </li></ul><ul><li>Some banks are headed for trouble, again </li></ul><ul><li>Unemployment is high and will likely go up </li></ul><ul><li>Their should be growth in this quarter </li></ul><ul><li>The trade deficit is better, but still high </li></ul><ul><li>The federal deficit is out of control </li></ul><ul><li>You can take steps to do well, even now </li></ul><ul><li>Cogent Strategies, LLC </li></ul>
  3. 3. The Banking System <ul><li>Cogent Strategies, LLC </li></ul><ul><li>Data is from the Federal Reserve </li></ul>
  4. 4. Deteriorating Condition of Creditors <ul><li>Cogent Strategies, LLC </li></ul><ul><li>Data is from the Federal Reserve </li></ul>
  5. 5. Economic Factors <ul><li>Cogent Strategies, LLC </li></ul><ul><li>Source : Bureau of Labor Statistics, Current Population Survey </li></ul><ul><li> </li></ul>Source : The Conference Board Unemployment is a lagging indicator it should go higher before it is through
  6. 6. Economic Factors – U6 Unemployment <ul><li>Cogent Strategies, LLC </li></ul>Source : Bureau of Labor Statistics This measure includes those who have not looked for work in last four weeks and those that have part time jobs for economic reasons
  7. 7. Economic Factors – Manuf. Employment <ul><li>Cogent Strategies, LLC </li></ul>Source : Bureau of Labor Statistics Manufacturing employment has fallen precipitously over 5M jobs in 10 years
  8. 8. Economic Factors <ul><li>Cogent Strategies, LLC </li></ul><ul><li>Source : Bureau of Economic Analysis </li></ul>
  9. 9. Economic Factors <ul><li>Cogent Strategies, LLC </li></ul><ul><li>Source : US Census Bureau </li></ul>
  10. 10. Economic Factors <ul><li>Cogent Strategies, LLC </li></ul><ul><li>Source : US Census Bureau </li></ul>
  11. 11. What Can We Do  Make Adjustments <ul><li>The economy continues to struggle </li></ul><ul><ul><li>Have a cash reserve </li></ul></ul><ul><ul><li>If you don’t have one, create one </li></ul></ul><ul><ul><li>Borrowing to create a cash reserve is ok </li></ul></ul><ul><ul><li>Conserve capital and contain costs </li></ul></ul><ul><ul><li>Be sure you make a profit with positive cash flow </li></ul></ul>
  12. 12. So What Can We Do <ul><li>Cogent Strategies, LLC </li></ul><ul><li>A crisis is a terrible thing to waste </li></ul><ul><ul><li>Disruptive circumstances provide opportunity to look at your business in new ways. Change your perspective. </li></ul></ul><ul><ul><li>Be assertive, go after the clients and business </li></ul></ul><ul><ul><li>Your business will require active management just to keep pace </li></ul></ul>
  13. 13. So What Can We Do <ul><li>Cogent Strategies, LLC </li></ul><ul><li>Understand your business. </li></ul><ul><ul><li>Assess what your customers truly value </li></ul></ul><ul><ul><li>Make a new plan based on today’s reality </li></ul></ul><ul><ul><li>How are you better than your competition </li></ul></ul><ul><ul><li>Measure & adjust, then do it again </li></ul></ul>
  14. 14. What Can We Do  Make Adjustments <ul><ul><li>“ Do what you should have been doing all along” </li></ul></ul><ul><ul><li>Be sure you hold on to your best people </li></ul></ul><ul><ul><ul><li>Train or coach those who are good </li></ul></ul></ul><ul><ul><ul><li>Consolidate positions or replace others </li></ul></ul></ul><ul><ul><li>Have Key Performance Indicators (KPIs) </li></ul></ul><ul><ul><ul><li>Perform for the short-term, plan for the long-term </li></ul></ul></ul><ul><ul><ul><li>Be ready for a “Double Dip” recession </li></ul></ul></ul>
  15. 15. Denver Business Advisors <ul><ul><li>Provide free professional services in law, accounting, management, and Sales/Marketing </li></ul></ul><ul><ul><ul><li>Maximum of three hours for each company from each person in a two month period </li></ul></ul></ul><ul><ul><ul><li>Can help businesses that need a little guidance </li></ul></ul></ul><ul><ul><ul><li>It is their way of giving back to the community </li></ul></ul></ul><ul><ul><ul><li> </li></ul></ul></ul><ul><ul><ul><li>Details are listed on the web site </li></ul></ul></ul>
  16. 16. Trade and Industrial Base are Key <ul><li>Cogent Strategies, LLC </li></ul><ul><li>Source : Bureau of Economic Analysis </li></ul>
  17. 17. Our Borrowing is Out of Control <ul><li>Cogent Strategies, LLC </li></ul>Source : White House Office of Management and Budget US Census Bureau, Foreign Trade Division Estimates for 2009 are based on the Trade Deficit for the first seven months of 2009 as an estimate of the full year. The Federal deficit is for the fiscal year ending 9/30/2009 supplied by the Office of Management and Budget.
  18. 18. US Dollar Will Continue to Weaken <ul><li>Cogent Strategies, LLC </li></ul>Source : US Federal Reserve The value of the US Dollar will continue to fall in relation to other currencies due to are large deficits making imports more expensive and domestic products more competitive over time.
  19. 19. Government Policies Impacting Economy <ul><li>Cogent Strategies, LLC </li></ul><ul><li>Be active and help drive change </li></ul><ul><li>Countries continue to manipulate their currencies </li></ul><ul><li>Border adjustable Value Added Taxes add to the challenge </li></ul><ul><li>Imports need to be held to same standards of quality and safety as domestic companies </li></ul><ul><li>Push back on anything that will raise expenses or increase debt </li></ul>
  20. 20. We Must Make More of What We Use <ul><li>Cogent Strategies, LLC </li></ul>From international Monetary fund 1980 to 2008
  21. 21. Trade Balance by Country <ul><li>Cogent Strategies, LLC </li></ul>From United States International Trade Commission Country Imports Exports Balance Millions of Dollars 2008 China $337,504.2 $67,165.9 ($270,338.4) Canada $334,839.6 $222,424.4 ($112,415.2) Mexico $216,328.4 $131,507.4 ($84,821.0) Japan $139,112.3 $61,435.2 ($77,677.1) Germany $95,827.9 $50,150.5 ($45,677.4) Saudi Arabia $54,282.8 $11,845.8 ($42,437.0) Venezuela $50,281.2 $11,829.3 ($38,451.9) Nigeria $38,236.2 $3,990.6 ($34,245.6) Ireland $31,298.1 $8,080.1 ($23,218.0) 4759.--Italy $36,015.2 $13,896.4 ($22,118.7) Country Imports Exports Balance Millions of Dollars 2008 Netherlands $21,102.5 $37,076.2 $15,973.7 United Arab Em $1,267.5 $14,620.0 $13,352.5 Australia $10,534.8 $20,948.2 $10,413.4 Singapore $15,718.5 $25,655.5 $9,937.0 Hong Kong $6,496.3 $15,880.9 $9,384.6 Belgium $17,378.5 $25,768.7 $8,390.2 Turkey $4,641.1 $10,277.1 $5,636.0 Panama $373.7 $4,614.6 $4,241.0 Egypt $2,343.6 $5,969.8 $3,626.3 Chile $8,182.3 $11,366.5 $3,184.3
  22. 22. So What Can We Do <ul><li>Cogent Strategies, LLC </li></ul><ul><li>With Weakening Dollar Buy Close to Home </li></ul><ul><ul><li>It is not easy, but usually you can </li></ul></ul><ul><ul><li>Think of your spending like votes </li></ul></ul><ul><ul><li>Japan, Germany, & UK Manufacture, why </li></ul></ul><ul><ul><li>Citizens buy in their own self interest </li></ul></ul><ul><ul><ul><li>Food, meat, produce, and dairy </li></ul></ul></ul><ul><ul><ul><li>Automobiles, computers, & yard equipment </li></ul></ul></ul><ul><ul><li>As dollar weakens, imports will cost more </li></ul></ul>
  23. 23. So What Can We Do <ul><li>Cogent Strategies, LLC </li></ul><ul><ul><li>Find a domestic source for products </li></ul></ul><ul><ul><li>If they are too expensive buy a little now </li></ul></ul><ul><ul><li>Bring any off shoring of jobs back home </li></ul></ul><ul><ul><li>Labor is more than just rate it is units too </li></ul></ul><ul><ul><li>Getting ahead on labor while unemployment is high will be viewed later as a smart move </li></ul></ul>
  24. 24. Summary <ul><li>Be profitable and cash flow positive </li></ul><ul><li>Tune up your business now </li></ul><ul><li>Keep close to your customers </li></ul><ul><li>Performance will mean cost controls, how is important </li></ul><ul><li>Have a cash reserve and preserve it carefully </li></ul><ul><li>Spend your money close to home </li></ul><ul><li>End labor off shoring while labor is plentiful </li></ul><ul><li>Cogent Strategies, LLC </li></ul>
  25. 25. <ul><li>Questions and Answers </li></ul><ul><li>Contact information: </li></ul><ul><ul><ul><li>Asa J. Beck, President Cogent Strategies, LLC 303-459-4870 [email_address] </li></ul></ul></ul><ul><li>Cogent Strategies, LLC </li></ul>