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socks and cat

What does it mean?

This evening's news headline says that Obama said the economy will get worse before it gets better. Can some one please tell me what this means? My business is holding up fine and dandy. But I'm wondering if I should avoid expanding until the worst is over, or if my business is at risk at all when it gets "worse".


It means we haven't seen the bottom yet...

A few data points:

November saw 533,000 jobs lost, almost 200,000 more then the analysts predicted, and the worst job loss in 34 years.

The fate of major employers like the Auto industry hasn't played out yet.

America's main export product for the last 15 years has been debt, rather then some tangible commodity, and fixing that is going to take a whole lot of shifting of the economy.

The commercial real-estate market it just hitting it's stride for unhappiness. Take for example, loans on major malls, many were financed with large ballon payments coming due in 2009-2010. Unfortunately this isn't the best timing to try and refinance when your customers are going bankrupt and dropping their leases. Expect lots of real-estate like that to go bankrupt and hit foreclosure in next 2 years.

So, what does it mean? It means we're in for a pretty long hard grind to shift back to a somewhat sustainable economy.

As to your own company, be more conservative then you would have been 3-5 years ago, this is a pretty major economic event... Companies that find ways to keep cashflow positive in times like this can often find themselves growing nicely... so that doesn't mean you can't grow, just do it wisely and without extensive risk.
I am not a financial/economy analyst, and this is not financial or business advice (I think Chris Ambler taught me to say that...)

celtic_wanderer probably said it better than I will. We're in for deeper hell before we can tread water and build again. As for a business expansion? If you're losing money by turning people away, it's definitely time to expand to fill the need. But consider also that your business is based not on survival but recreation or entertainment - disposable income vs. that which people will spend to maintain a roof over their heads, eat, and whatever utilities they must have. Then comes the pole dancing fitness.

Then again, I think it was most memorable when Jack Nicholson's character typed "all work and no play make jack a dull boy" a bit excessively. People crack when they can't have some fun. Your business fills that need.

Solution? Leverage goes a long way here. Just as much as a new location or new instructors may be needed to expand, they want you to sign them on with some security as much as you want to have the flexibility to bow out without loss if things go badly in the coming year and you have to scale back to your business as it is now. A potential space renter would rather have a non-locked income coming in each month - compared to none at all, I'd think. Or on shorter/different terms to allow both of you some escape plans - or further plans at good deals if you're not affected by this horrible economy downturn predicted.

But also, don't let the media scare you too much. Let me venture on a quick tangent. I know someone who used to have a high position @ AT&T who just went on a massive downsizing. Economy? Hardly. Timing and bodies? yup. the company had essentially triple the redundant resources they needed, and it's called cleaning out the deadwood and redundant jobs to scale them down to a non-wasteful business that they no longer were. Coincidental? Sure. Economy? Prove it.

So while I can yammer on with the best of them, hopefully I'm just causing you to weigh pros and cons for your own next move to stay as you are, and wait it out, or jump into the risk of expansion that may or may not have to scale back, depending upon how many of your current, or potential clients are affected by the evil economy.

That's my 3 cents. Take what you like, purge what you don't.



Economy will worsen for at least another year. If your business hasn't been impacted yet then you're probably okay but I wouldn't make substantial investments for at least a year.

Real prices are still accelerating downward and Seattle tends to lag the general market, so I wouldn't look at buying real estate, either.

Wamu is laying off 9000, most of them in Seattle, Boeing has announced unspecified layoffs for 2009 and there's rumor of impending layoffs from Amazon and Microsoft.

Possile impact to your business should be visible by March if it's coming. I'd be very surprised if your growth continues.

Not a complete luxury. I'd say that she fulfills a psychological need, as well as a substitute for more expensive luxuries.

Still, I'd advise avoiding large capitol investments for the next year at least. If you can expand onto the east side without running out your reserves, I'd say it makes sense if you can keep your instructors busy :)