Well folks, things are starting to look pretty bleak out there. As an optimist I want to believe the future is brighter than the past, but I am having a hard time sleeping at night and imagining the days ahead won’t be filled with economic strife.
Shall we review some basic facts:
The U.S. debt ceiling has been raised by trillions – simply meaning we are sinking further down the quicksand without any help of getting out.
Do you realize one trillion dollars is a thousand BILLION dollars? This is really getting out of hand. It is pretty sad to realize our World Economic Powerhouse is actually just like the 24 year old post college grad who is taking out (and maxing) another credit card just to pay off the creditor calling them on the phone, while not even remembering when the specific credit line in question was taken out.
S&P has downgraded the U.S. credit rating from AAA to AA+, an unprecedented action initiating a period of economic uncertainty around the world with no clear ending in site.
What happens when the world loses total faith in the United States?
The tremors of volatility in the stock markets has recently increased in magnitude, with numerous daily slides of more the 4%, sending mini-shocks of fear and loathing through the psyche of any shareholder.
Go ahead, take a look at what happend in the years following the 1929 market crash… sound familiar?
Here are some stats on the impending recession; it’s a great (but long) article but really places things in perspective. Choice quote:
So, I guess I am going out on a limb, without any help from an inverted yield curve, and saying that we will be in recession within 12 months, if we are not already in one. This will be unlike any recession we have seen, as there is not much that can be done, other than to just get through it as best we can. Sit down and think about your own situation and prepare.
So after you sit down and think about your own situation, what should you do? Well, if you are an entrepreneur I have a thought…
Understand How Your Business Adds Value To The World
Every entrepreneur need to take a tough look in the mirror and ask themselves what it really means to be in business. The most basic tenets of business are profits, losses and margins. As an owner, if you are not bringing in more money (adding value) than you are spending (extracting value), you will sink. One would think the most important of those 3 is profits – and I do generally agree with that position – yet that may be precisely why we are now in this economic mess. It turns out that profit above all else ends up creating more losses all around. This, in my opinion, has led to our current toilet bowl effect where regardless of what happens we are circling further and further out of control.
A few questions worth considering when looking in the mirror:
Am I making a positive difference in the world?
Does my business add value to the world? Or does it just extract value?
How can my business create an order of magnitude more value than the current solution?
Where is the government wasting money and how could I provide a better and cheaper solution?
Understanding how and where you add value to the world is just the first step; illustrating how you add value to the world is where you must focus your time and energy. Having some sort of value quotient (if that is even possible) is where businesses worth can be easily quantified. People need to know how you make the world a better place (socially, economically, environmentally) so they can start to make healthier world choices.
Specifically, I am referring to the question: Is the world economically healthier because company “X” exists? If there is not a resounding yes from the outside, I am afraid we will continue down this toilet.
Apple is now pretty much the most valuable corporation in the world, but do they really add value to the world? Controversial statement, yes. But of course a valid question, since people spend quite a bit of money on their consumer products. How about the next company, Exon Mobile? How much value are they adding to the world? Arguably, they aren’t just extracting oil from the world… And remember, these are the most VALUABLE companies in the world today.
The only way out from this mess is going to be through entrepreneurial fortitude. Governments worldwide have only proven they are inept and cannot figure out how to spend less money. It seems rather than actually ‘governing’ towards a solution, they are just ‘spending towards another problem’. This does not work and we are now realizing how much we are in over our heads. The world will be saved by entrepreneurial fortitude and finding a more efficient method to solving a societal problem.
The world is in desperate need right now of smarter, more courageous, and innovative entrepreneurs who are not out to exploit current inequities but looking to reshape and save the world so their children will have something to actually live for.
Image courtesy of Flickr user Amagill.