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Where’s US economy heading and how do you make it work for you personally and in business?

US economy has never dealt with a recession like this one. We hear lots of talk about U shaped or V shaped recession, with few others thrown in. Appears to me we are closest to recession that has held Japan down for many years. Plain old stagnation. Can it switch to a stagfation? Yes, but the way we need to react as individuals or businesses is the same.

Why don’t we care which it is?

In a stagnation, the economy just doesn’t have much recovery. In a stagflation, we add inflation to the mix.

What’s different from previous recessions?

In past recessions, small business has lead the recovery. This time government is trying to lead the recovery in the US, and internationally in those countries most affected. Many states in US are in serious financial trouble and are raising taxes. Likewise many counties, cities, and towns. In the past we have not experienced the severe budget shortfalls at all levels of government. As governments at all levels have to raise taxes to make ends meet, it significantly slows the ability of American business, especially small business, to recover.

Whether government overspending just slows the recovery or leads to inflation, the result will be the same. A very slow recovery for the US economy, and by extension, other countries that are severely impacted. Increased government taxes and programs adversely impact business two ways, directly from the taxes, and indirectly from time lost adhering to more governmental regulations.

What’s solution for individuals and businesses?

Reduce debt and increase cash reserves. The goal is to have sufficient funds to take advantage of an upswing in the economy, personally or as a business. Or to preserve existing personal or business lifestyle should inflation pick up.

Personally, people need to do everything they can to reduce their amount of debt. Reduced debt enables increased savings or simply paying cash for more future purchases.

Many businesses, especially small businesses have done excellent job of reducing debt and expenses. Now they need to identify ways to increase revenues while still holding costs down.

How can business increase revenues?

Find new sources of revenues. Existing sources of revenues will not be enough for most businesses. Then back it with great customer service. As an example, have real people answer the phones. Use voice mail only as a last resort. Biggest customer complaints is not finding a phone number for a business and then only getting voice mail, that often goes unanswered. Business can not afford to let any sales opportunity go by, and providing great customer service enables more sales opportunities.

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