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| To do so, they need to identify, accept the problems and take actions to correct the problems, survive the business and improve the net profit when things will sound better. Sometimes, business owners and decision makers associate correction in the business to the decrease of operational expenses and forget that the goal is not to reduce operational expenses but to increase the net profit of the business. If Sales remain at the same level and you trim operating expenses, you may increase profit, but if Sales drop at a pace higher than you can cut costs, the business may not be better off. You may need to look at what you did well in the past. For example, the Company Sales success history by sales market and channel may reveal that the Company has enough available market share, achieve annual sales growth over the next 1-2 years and improve profitability. |
| Then, organizational arrangement needs to be addressed in order to reach the goal. In terms of organization, the objective of every single business owner consists in establishing the structure efficient enough to optimize “the capacity of each and every resource with demand from the market” (Eliyahu M. Goldratt and Jeff Cox in the Goal). Most Business owners have created their business from scratch and know their industry, but they may not have the knowledge or not be able to step back to define the business model and establish the most efficient structure for the business and in such case, they need the assistance of a Business Management Consultant or a team of Business Management Consultants. The Business Management Consultants bring techniques to improve sales and marketing, business structure, operational efficiencies, control factors and effective tax planning specific to the particular business. Consultants offer the expertise or the vision that is lacking internally or externally from current pool of talent. Good sound business sense is a common trait that can be traced through all successful businesses. Some positive economic news point a lighting round ahead for small business owners, but only business owners who consent to do things differently will take advantage of the game and be proud of being what we call an “Entrepreneur- Game-Changer” Positive Economic Development We may come to a major clearing in the woods. The second quarter of 2009 began with good economic news on the first days of April 2009, showing numbers better than economists expected and related to construction spending, pending home sales, auto sales, Index of Supply Manufacturing (ISM), New Business Orders, the flexible changing rules for valuation of bank securities. Steeve Liesman, senior economist at CNBC said on April 3, 2009, that tax refund may have been increased by about 15% in 2009, in comparison to 2008. In addition, at the summit of the Group of 20 (G-20), it was mentioned that $5 Trillions in fiscal expansion and $1 Trillions for poverty alleviation could be injected to boost global demand. Also, the increase in the price of oil and the price of materials, last week, could be a signal that the global economy is moving. The 2010 US Budget has been voted. The Budget is planning to invest massively in education and alternative energy, predicts the creation of some 3 million jobs and a 4% growth in GDP. The massive Government intervention could be a wild card to accelerate the cycle, make the economy and businesses recover. From the stimulus plan promoted by the Obama Administration, States are set to receive $27.5 billion in federal stimulus money for roadwork, which announcement seemed to generate the larger gain on the Dow Transportation since 1939. “The World of Asphalt Show” in Orlando Florida in the middle of March reflected what could be the multiplier effect on the entire industry of allocating $27.5 billions dollars to State Transportation Department for road work, from the contractor they will hire to the producer of raw asphalt, to the seller of equipment, to the manufacturers of accessories like: light bulbs for work at night. |
| Government Supplemental Initiatives Some experts like Nariman Behravesh of IHS Global Insight talked about the occurrence of a classic approach to a turning-point from recession to positive economic growth. The Growth Domestic Product (GDP) represents the most widely acceptable indicator to measure economic growth and it is defined as the market value of all goods and services produced by a country to the limit of its border, over a period of time (www.investopedia.com). The GDP is usually reported each quarter on a seasonally annualized basis. One way to calculate the GDP of a nation consists to add the expenditures of all the sectors in the economy over the period considered for the computation of the GDP and those sectors are: - Consumers receiving wages spent for consumption and their savings for investment (durable goods, housing); - Enterprises using the proceeds of their sales to pay wages to purchase from other businesses and to invest totally or partly of their net profit in inventory and fixed assets (equipment or building); - The Public Sector represented by Federal, State and Local Government using tax collecting to purchase labor from households and goods and services from enterprises and provide public services to their citizen and residents; - The International Community: the United States expects a positive balance of payment (Net Exports: Exports - Imports) while trading goods and services with the International Community. The expenditures approach calculates the GDP by summing the four (4) groups of expenditures aforementioned: GDP = Consumption + Investment + Government + Net Exports, with consumption the largest components and accounting for two thirds (2/3) of GDP. When the Private Sector fails to invest, Residents and eventually Foreigners reduce their consumption and in such circumstances, an important economic role for Government may arise as a response to correct market failure, especially when the cost of the market failure spills over the entire society. As assets hold by commercial banks and brokerage firms became impaired two years ago, banks could not raised capital against them, the US financial system got in trouble and the crisis spread out to the other sectors of the economy and resulted in lost of jobs, lost of consumer confidence, a tighten credit market and an estimate of $12 trillions of toxic assets sleeping in the Balance Sheet of US financial institutions. The good economic news spread out last week as the second quarter kicked off, make John Herrmann of Herrmann Forecasting predicts a growth in GDP for the second quarter of 2009 and Larry Kudlow of The Kudlow Report on CNBC talked about “an important bottoming signal”. GDP growth, if happened sooner, may stabilize the rate of unemployment, reestablish consumer spending and boost demand. |
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| THE LIGHT AHEAD FOR THE ENTREPRENEUR-GAME-CHANGER |
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| Restoring the energy of small business owners in America America has seen thought times before and during those times, American Entrepreneurs tapped into their spirit of innovation and America emerged stronger than ever before. Government initiatives are fostering innovative solutions, especially in the private sector, but ultimately, it is the private sector which must act as the engine of growth and employment. It seems that for the last decades, 90% of new jobs and 97% of US exports were generated by small businesses. Like John R Burgess, International Profit Associates (IPA) Managing Director said in “The American Dream” (IPA Today Newsletter March 2009), small business owners have to restore the American dream promise .In today’s changing economy, every business has problems, but for the American dream to be restored, we need to have faith in the future. Business owners should have the mindset to undertake whatever is possible to save and prosper the business. |
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