GoFaxer Blog

In a recent article by Bill Fleckenstein, he says that pessimism is called for in the coming economic future. I know that this isn’t what you small business owners want to hear. But it may be the truth.

Some people think that the embarrassing collapse and rescue of Bear Stearns was the low point of a system that is turning around. But Fleckenstein doesn’t buy it.

The overwhelming reality is that both the collapse of the real estate bubble and the credit crisis, have combined to create and extremely unstable economic situation for the near future. It’s for this reason that many economists aren’t feeling optimistic.

One is forced to ask the “Therefore what?” question in regards to their small business. I think that the first thing that one needs to realize is that although tough times may be ahead, the market won’t completely collapse.

There still is opportunity out there. There still is good reason to think positively about the long term future. As long as there’s innovation, with genuinely great new products that people want to buy, the long term forecast will always be postive.

With that opportunity, comes a greater responsibility for young and small businesses to be extremely wise with their financial expenditures. Anyway to cut costs, be it using less paper through fax services via the Internet, or saving money on electricity through more efficient light bulbs, now is the time to do it.

As I’ve stated many times before, the floundering economy means tough times ahead for small business owners. Although there will be obvious efforts to cut costs, including ditching the fax machine for Internet fax technology, there is one major advantage that many employers are forgetting.

Now is the perfect time to hire. Why? Business is the art of upgrading your team. And the jobs market has been flooded with possible new hires. This means that you’ve got a new selection of potentially great employees. It’s a buyers market for hiring.

Bloomberg.com reports that the U.S. lost 80,000 jobs in March. That’s 80,000 potential new hires that have flooded the market. Now, granted, a lot of them may not be great picks, hence their firing, but a some of them may be really great people that just found themselves in the wrong place at the wrong time.

Even though your own P&L may not be looking great, now may be the time to let go of a few low performers, while hiring a few really great new players. Restructuring can be painful sometimes, but now is probably the perfect time to do it. If your current set up is working well, don’t go kill the work horse, but if you’ve got problems it’s time to find some new blood.

Sometimes I worry that the media is creating a recession. I know that they should report the news, and the business news is generally not good these days. But pundits constantly suggesting that we are in a recession influences investors to stop buying, thus creating a recession.

I have to give credit to Ben Bernanke for not letting the word come out of his mouth. He’s said that he doesn’t expect the economy to grow much the first half of 2008. But he’s not going to define the situation before we really know what the situation is for a sustained period of time.

Regardless of whether the r-word must eventually be used by our Fed Chief, the fact of the matter is that we’re not looking at a positive growth year economically. So if there’s any advice I can give you and your small business, it is this:

Stop using a fax machine. Get rid of the machine. Take it out into a field and destroy it. Well, maybe you can just throw it in the dumpster. But either way, just get rid of it.

Fax machines are a waste of time. You can now send faxes through email. It’s faster, easier, and less expensive. That is the first step to saving you money. With that out of the way, you’ll need to look to every other way possible to cut expenses. It’s not fun but it’s a must in the current situation.

So, with the weakened economy, it’s easy to just stop. Stop taking risks. Stop doing business. It’s natural to just want to wait out the storm.

But this is bad news for any all businesses. If this happens across the board, we truly will enter a recession. We will stop producing and consuming and our businesses will stop making money.

So what’s the right attitude in such an economy?

I think the answer would come from a personal trainer. There is the tendency when you want to lose weight to cut your calories dramatically. Some people go on an apples and carrots diet. They might lose weight, but a lot of that weight is going to be muscle. The problem with losing muscle is this is the part of the body that burns calories. So they might lose some weight initially, but over time, their ability to cut pounds decreases.

The same goes for a business. You want to make decisions about your business that increase the muscle mass of your company, while cutting fat. This requires a lot of discipline. It might mean that you don’t renovate your building quite yet. It does means that you switch to more economical systems like email fax.

But it also means that you must spend more money on marketing. You must spend more money on sales. Just don’t stop spending. Stop spending money on the fat and continue to build the strength of your business because you’re going to need it if the economy continues to worsen.

With everyone on Wall Street worried out of their minds over the Fed’s bailout of Bear Stearns, the question every economist and business person would like to know is clear—When will things get better?

There is one major problem that has to be fixed or fix itself. And that is the continuing slumping housing market. If it does not get better, investors will hold off in buying stocks. Why?

A person’s house is their greatest investment. One usually has the most capital invested in their home. One also counts on that investment being the most solid. If, however, their biggest investment is losing value, it’s hard to rationalize spending more money on other types of opportunities. Most people will sit tight, wait until the entire economy settles down into a nice steady growth pattern again before investing heavily again.

What does this mean for business owners? We may have to weather a serious storm here in the coming months. Every way that we can cut a few dollars will count. Services like Internet fax may now be an essential move, rather than something to get around to when you get around to it.

Let’s hope that things get better, and until it does, we’ve got to be smart during this very iffy time.

It was announced yesterday that Bear Stears got sold to JPMorgan Chase for a rock bottom price. All other banking institutions are a little bit concerned, to put it mildly. If it could happen to a company like Bear Stearns, it could happen to almost anyone.

The entire move was facilitated by the Fed, along with a new startling announcement: The Fed will be lending directly to security dealers, something that hasn’t been done since the 1930s.

Although I don’t think anyone really believes that this will be as bad as the Great Depression, which stands as the monoliths of financial disasters, many economists are speculating that we’re in for a world of hurt. In other words, this may not just be a recession. It could be a really bad recession.

So what do new entrepreneurs do in the face of almost inevitable financial hardships. Well, for one thing, your business concept better be solid. And it also better not be relying on consumers having a lot of extra cash.

It also means that you’re going to have to be super smart with your money. You will most certainly need to take advantage of smart technologies like email fax. You will have to watch your costs like a hawk.

But in the end, we don’t want to panic, because that’s the very thing that will make it worse. We must move forward cautiously, but still move forward.

The stock market is not doing well. Here’s an excerpt from yesterday’s report on MSN.com:

“Stocks suffered their worst losses of the year and their worst since last summer after a leaked report on the state of the U.S. service sector showed an economy slipping much more quickly than expected.”

In the end, the Dow Jones Industrials was down 370 points. The Nasdaq Composite Index was down 73 points. And the Standard & Poor’s 500 Index was down 44 points.

The article points out that financial and energy stocks were the worst hit by the drop.

So what does this mean for the average small business owner when they see macro numbers like this? It means that you may have to run the very best business you possibly can run to stay in business in 2008. Now is the time to innovate. Now is the time to strengthen your company like never before. Now is the time to increase efficiency dramatically.

As I’ve said before, one of the best ways to do this is to switch from old-fashioned fax technology to Internet fax. It will save you money and time.

In the end, it’s those who use technology to advance their cause who will retain their cause. So be wise my friends.

It’s beginning to feel a lot like 2001. That’s right. Everyone’s saying the big “R” word. In case you haven’t been reading the economic headlines, “R” stands for recession.

Yesterday the Fed cut interest rates by one half of a point. That’s good for people looking for loans but it’s bad for the economy in general because it means the ship is going down. Interest rate cuts are the ship Captain’s way of throwing out the life boats.

A recession is defined as a widespread decline in economic activity lasting more than a few months. Many economists are speculating that we’re already in a recession. But it’s one of those things where you don’t really know until you’re well into the recession.

The signs are not looking good. Today, with the announcement of the rate cut, the market seemed to increase, only to collapse by the end of the day. And there’s no immediate solution to the housing marketing struggles. Real estate is not likely to improve for another year or so.

So what’s a small business to do when faced with these almost eminent challenges? You’ve got to start shoring up cash anyway that you can. You want to make payroll and prevent lay-offs Now is the time to be more efficient than you’ve ever been. The first thing to do on your list is to get rid of the fax machine and start using Internet fax. It’s one of many solutions to a world wide challenge.

No government intervention is going to save a struggling business. Those businesses who continue to fail to innovate with great new technologies like Internet fax will certainly continue to fail.

But the government is doing their best to help struggling companies stay afloat with the new stimulus package. This could be very important for specific businesses that would be strong otherwise, but do to certain economic factors, are particularly struggling—the real estate industry comes quickly to mind.

Fortune magazine reports:

“First and foremost, the Senate bill, proposed by Senate Finance Committee chair Max Baucus (D-Mont.), would extend a helping hand to businesses facing large operating losses in either the 2006 or 2007 tax year, allowing them to write off those losses against gains as far as five years back, rather than the current two-year limit.”

This comes as handsome news to the aforementioned businesses that are struggling. I was concerned that all of the talk of giving tax refunds to the poor and middle class were ignoring businesses that might need that extra boost to keep afloat during the slow-down.

I was pleased to see that there will be a total of $31 billion given out in tax savings to business owners in 2008. Let’s hope the bill is quickly ratified.

It amazes me how quickly the economy can rebound with one announcement. Last week George Bush announced that there would be an economic stimulus package put in place this year to mitigate the effects of several poor economic factors. Wall Street made an almost immediate comeback.

Jim Jubak suggests that the reason Wall Street recovered so quickly is that it believes that government intervention by the President, Congress, and the Fed can keep the economic downturn short.

Over the past two decades, recessions have been quite short. The assumption is that we’ve gotten really good at keeping the economy growing without severe downturns.

Jubak does point out, however, that there is a very real danger that this slowdown or recession could be worse than usual:

“Because so many consumers got used to drawing against their rising home equities to fund their spending, the bursting of the housing bubble and the crisis in the subprime-mortgage market have resulted in far more damage than usual to consumer cash flows.”

What does this mean for small businesses that have less available cash and profit to protect them in tough times? You must find every smart way to cut costs. And you must spend your money in wise ways that will increase your sales. In other words, it’s time to take that step to switch over to Internet fax and other technologies that will save you money and help you weather what will be a small or large storm.