Posted tagged ‘economic growth’

Returning to “Normal”

May 15, 2009

ile it is valuable to know how this challenging economic situation occurred, the gnawing question on everyone’s minds is “when will things turn around?”

Joel Naroff thinks that we are on our way but he does have some concerns for the future. In his own words, Naroff notes that “the pendulum has begun to swing.” Yet, it will likely take years to clean up the mess that was made while cleaning up the mess.

For the most part, he believes the government stimulus was the right solution.

His rationale is pretty straightforward.

For a country to exit a recession there needs to be a particular sector leading the way. We’d love it to b the business / housing sector. However, the business / housing sector assumed the turtle position. They went into a shell and reduced costs.

Our second choice would be the household sector but that sector is worried about having jobs and is hoarding cash, so this group won’t be our savior.

That leaves only one other segment to create growth – the government.

The reality is that there will be a lot of spending from the stimulus bill and it will start with construction.

And soon, 90% of those who have jobs will realize by the summer that they will make it and start to buy.

The jumpstart from the government will jumpstart the household sector which will jumpstart the private sector.

More good news…

The housing market is starting to bottom out. We know that this is happening because distressed assets (foreclosed homes) are starting to be purchased. If people are willing to make a deal, it means that they believe the price is close to its bottom.

Confidence is starting to rise.

And a lot of things have stabilized…even though we now need growth and not stabilization.

There are clouds though on the horizon.

The first concern rests on managing the potential for significant inflation. Naroff thiks that the Federal Reserve will have to increase the current low interest rates quickly – perhaps to 5 or 6% — and doing so will likely slow down growth.

Second, the latest budget projections has the federal deficit  approaching $2 trillion. And if interest rates go up, the debt service on this deficit will increase dramatically.

Banks will also move much more cautiously when lending money, in part because of their need to avoid the mistakes that were made so recently.

All of these factors will moderate growth.

Still – and this may actually be a good thing – we will need to learn to spend our income and not the appreciated financial or housing assets that so dramatically rose.

The bottom line for Mr. Naroff:.

Cleaning up the mess that cleaned up the mess will take 5 – 10 years. We have problems with interest rates, the deficit and the government being in the private sector.

We have not had real innovative growth for 20 years. We need to have technology innovation rather than financial innovation.  We have had recession then bubble then recession then bubble. Our growth has been driven by bubbles.

You can expect long periods of modest to moderate growth as growth conditions have changed dramatically

The Fed will raise the funds rates quickly because we will be worrying about inflation. Long term rates will likely rise by the Fall. He suggests that the Fed will be raising the funds rate from zero to 5- 6% in a year.

The ride will still be bumpy but it looks like, according to Joel Naroff, at least we are riding in the right direction.


What I’m Telling My Clients – Part 2 (or how they can create their own economic stimulus package)

December 23, 2008

So what would a client referral meeting look like?  Here’s one possibility.

The underlying context to this meeting is the recognition that the greatest challenge that any business owner faces, particularly in these challenging economic times is to drive new business to the company. The second greatest challenge is to fix a problem or capitalize on an opportunity that they might see but don’t quite know how to address.

Each of these referral meetings would last an hour. Only a small number of clients, perhaps six to eight clients, would attend each meeting. Ideally, they would have complimentary businesses.

Each client would  discuss

  • What values his or her company provides,
  • Its ideal client and
  • A particular problem or opportunity that it is facing.

The idea is to try to get each a client new business via referral or find them a company that can help them meet a pressing need or opportunity.

That’s the whole agenda.

The only thing that is required is that each company approach the meeting with a mindset to offer a warm referral to any of the companies represented in the room. By doing so, this gathering of leadership would create more growth and value.

And each company will get more business and / or be able to grow its business more effectively.

What I’m Telling My Clients – Part 2 (or how they can create their own economic stimulus package)

December 18, 2008

As the bailouts and their discussions whirl about us and as the list of companies laying off or employees or shutting down operations grows longer and longer, I began to wonder if there wasn’t a small business version of an economic stimulus package that could be implemented.

And if there was a version of economic an economic stimulus package for small businesses, who could and would provide it?

It appears to me that there is such a “package” out there and the ones that can provide it may be small business themselves.

Arguably the greatest challenge that any business owner confronts, particularly in these testing economic times, is to drive new business to his or her company. Fundamentally speaking, as it always has been, the key to long term growth is to “grow the pie” and attract more business. Provide more appropriate services that make a difference and you will earn more business and a greater share of the customer’s wallet.

Many companies provide services to organizations and businesses that are in related fields. Others provide services to companies in a wide range of industries. What if, each company leveraged its customer list to grow their clients’ businesses?

Imagine, if you will, a meeting of six or seven of your clients who work in one industry but provide different services within that industry. More than likely, each of these clients knows other companies within the particular industry. Because each of these companies is your clients, you are related to them and a reservoir of trust has been established.

Suppose next that each one of your clients attending this meeting was asked to participate with the intention of referring one of its customers to one of the businesses represented in the meeting. The economic impact of these referrals would be profound.

Referring clients to one another would create a reciprocal relationship built on real economic value. Additionally, in effect, because your business would be in the upper parts of the minds of your clients, the number of people selling and promoting your value and services would grow geometrically as the trust that you have demonstrated in them would be returned in their discussions with their clients.

In a short time, you might discover that you have an army of salespeople selling your value.

In the next post, we’ll take a look at the structure of such a meeting and how to make it work for you.

In the meantime, please write and share some innovative ways you are growing or helping others grow their businesses.

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