Outlook for 2010

Bill Warner Sunday, January 03, 2010

Boy, I want to be optimistic, but I have too many doubts. It’s not just me either. The subject of a lot of holiday party talk has been about the economy. Much of that is centered on the subject of job growth and the state of the US dollar.

At the heart of it all

Job growth now is stagnant at best. Unemployment is actually increasing when you discount the growth in short term government jobs that produce no economic growth and count the people who are no longer on the unemployment ledger. There are a lot of moving parts that are needed to put velocity back into the small business engine.

  • Banks have to start loaning money again; companies need working capital
  • Government has to reduce regulation on small businesses; too much is spent on responding to new regulations and it stifles businesses
  • Removing the capital gains tax will fuel investment in small businesses; bringing more private equity to entrepreneurs
  • Lowering the income tax on businesses will accelerate investment in company growth; increasing profitability
  • State and local government resources are needed to support entrepreneurship; creating a community in support of entrepreneurship
  • Reduction of the individual income tax will put more money back into people’s pockets; firing up affordable spending

Until we get legislators in place that understand what we need, entrepreneurs will be fighting an uphill battle again in 2010.

The unknown about our dollar

I am no expert on monetary policy, but what I do see still frightens me.

  • The debt is higher than ever in our history
  • The growth our debt has never been higher in our history
  • Other nations are visibly looking to move off of the dollar
  • We are getting a lot of pushback on purchasing any further government securities

If we were to have a balance sheet for the United States Company, it would show that we are bankrupt and have negative cash flow. These are all signs that lead me to continue to worry about a coming inflation, especially if we really put the TARP money into circulation.

So what do entrepreneurs do?

The growth of our economy will come from the small business arena getting back on track. For 2010, entrepreneurs are going to have to continue to fight through the lack of effective legislative and administration support. Staying with the basics of survival is first and foremost:

  • Execute well thought out marketing and sales plans; the fewest mistakes as possible
  • Keep nearly a year’s worth of cash burn in place as a buffer on further economic decline
  • Hire only what will be needed in the long term; outsource the rest of your personnel needs
  • Invest in cost cutting measures that pay back in a few months
  • Continue to establish and nurture a lasting credit line

The pros will tell you that this is the time to look for great investments at low prices. That is still true, but I suggest that you don’t go too far out on that limb with so much uncertainty and volatility in the economy.

Filed Under: Business Operations, Business Strategy and Planning, Starting a Business



Bill Warner is the Managing Partner of Paladin and Associates, a business consulting firm in the Research Triangle Park area of central North Carolina, and is the Chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast.

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