Inflation is still rising, and in response to this, rates are steadily increasing. And many economic experts feel that rising rates will slide us into a (hopefully brief) recession.
Ok, that was two sentences of doom and gloom. We need not go down that road further. We can all read the news.
However, it is productive to talk about doing business in today’s economic and financial climate. For certain, there will be challenges and bumps ahead. That is not in dispute. But at the same time, there will be numerous opportunities present for many companies, and there are some surprising economic facts, as well.
Here are several thoughts to help put a better, more realistic perspective on our current economy, today and tomorrow.
1. Been There, Done That
First of all, the sky isn’t falling. If you’ve been in business for any decent length of time, you’ve been through this before. So you know how it works. And if you know history at all, you know the economy is full of ups and downs. Looking at the larger picture, this almost has to happen.
So what do you do? You push forward for the next inevitable up.
2. Watch Out For The “We Lost” Feeling
I had a client who waited a little too long to choose a model on a needed piece of machinery he was going to finance, and just missed the last rate increase. For a few hours, he was going to bail on the purchase entirely. Because he felt like he “lost” (as he put it).
But then he thought more about it. He needed the machinery, it would produce revenue, and rates were only going to go up again. We talked about it, and afterward, he felt more like a winner. He got his machine, and it’s producing revenue right now.
It’s easy to feel like you missed out when rates were lower a few months ago. But they will likely keep rising, and stay, for many months, if not years. If you’re waiting for them to come back to where they were before the latest increase, you’re going to be waiting a very long time. There is little advantage to that.
3. Honestly, Rates are Still Pretty Low
Again with the history, but if you look at rates over the last few decades, you’ll realize they are not only still low, but are still historically low. As far as rates alone are concerned, it remains a favorable business climate. Inflation may be high, and rates were higher than they were last year, but borrowing money is still pretty darn cheap.
4. Let Others Stall
Some businesses turtle right up at the fist sign of trouble. Usually these are newer enterprises experiencing a slowdown for the first time, and this is where they get passed by more established companies who have been through this before.
These experienced companies know its easier to compete in good times, so they’ll happily let the competition hit the brakes while they hold serve, and even move forward. Many companies who slow down too much will not survive.
5. Take Advantage of the Section 179 Deduction
Section 179 is still there, and it’s over a million dollars. This means you can deduct 100% of the cost of most capital equipment bought, as well as many other business purchases and improvements. And guess what? Your company qualifies to use it.
6. Stay Positive
Listen, it’s a rule that any recession advice must have a little rah-rah to it. But attitude does make a difference. Especially if you look at it through a larger lens.
I’ll tell you about one more client before I finish. He was recently buying a large crane to pick up trees. We were talking about business in general, and during our conversation he said “things still need to get done”. He told me this after working on a Saturday, finishing a large job.
Yup, things still need to get done. I like it!
We can’t will away a recession, and we can’t act like nothing is happening. But at the same time, we cannot overreact either. Recessions and slower times are often where companies truly separate themselves from competitors, because they are simply better at navigating choppy waters.
Keep the bigger picture in mind, work with what we have and forge ahead!
