Mass Layoffs- A Hardship To The Economy

ROLLING BAILOUTS: THE ECONOMIC CRISIS AND SHIFTING CONSUMER VALUES

It's been amassing for a while, and now it's here: the perfect — and perfectly terrifying — economic storm. What's happened and what's next?

What is next? We see the current crisis as deep and culture-shifting, with repercussions for years to come. Quite simply, folks will drastically cut back on spending because they will have no other choice. This decline in consumer spending will steepen and lengthen the recession, likely making it the worst global downturn since World War II.

Following on the heels of the current storm, we are seeing a rewiring of the world’s economic system, including the likely near-nationalization of large swaths of America’s financial services industry. The financial system we have lived with since the Depression will change drastically. What replaces it, and for how long, is still a huge question. And by no means are we out of the woods yet. There remains significant risk that things could unravel further.

For more perspective on how the current economic tribulations will reshuffle consumer values, we can look to the past, noting how other major shifts have made their mark on the culture:

Great Depression: The stock market crash on Black Tuesday in 1929 kicked off a deep global economic downturn that most nations didn’t recover from for a decade. Consumer shift: Years of hard economic times created a nation trained for thrift and pragmatism, and resulted in the establishment of many of the programs that have shaped our economic environment for the past 60+ years.

1970s Energy Crisis: An OPEC oil embargo in 1973 caused prices to rise and lines at the gas pumps to lengthen. Consumer shift: Concern with energy prices led to a small-car boom and a wave of in-home conservation, as consumer values turned to independence, conservation and innovation to deal with high prices and shortages.

9/11: Terrorist attacks on New York and Washington in 2001 shocked the nation, killed thousands and paralyzed domestic and global economies for months and years to come. Consumer shift: Americans circled the wagons, embracing values of safety and security in a time of great uncertainty about their own personal safety and emerging geopolitical strife.

Hurricane Katrina: Katrina pummeled the Gulf Coast in August 2005, causing widespread regional damage, breaking levees in New Orleans, and causing massive destruction and loss of life in the region. Consumer shift: Consumers seized on values of confidence and control as our collective belief in the government’s ability to help in times of need plunged.

Looking ahead? The United States will emerge from the current crisis notably weakened economically — and that may not just be for the short term. Right now, our debt burden has skyrocketed, and our credibility is shaken. The days of the dollar's unquestioned global centrality are numbered, and economies with strong balance sheets — notably China — have only gotten stronger. Beware inflation! The capital infusions from the Feds have many experts fearful that the inflation genie is out of the bottle. This will rob consumers of whatever spending power they have left and prolong the recovery.

What follows is a high-level overview of changes already happening in values, categories, and various demographics.

Implications on Values

Control
Global consumers are clamoring for ways to reestablish a feeling of control over their finances, material possessions, future and general anxieties.

Security
What, me worry? Yes! Consumers around the world need partners in confidence like never before — brands and services that deliver reliability, trustworthiness and even an order of calm.

Savvy
Consumers still want to find clever ways to beat the system, even though that system is already broken. Help your customers find the timeless delight in circumventing financial obstacles and getting the deal of a lifetime — or the week.

Thrift
This is not a choice but a "new normal" mandate for all. Welcome to the age of pinching pennies and selective pampering.

Self-sufficiency
Whom can you trust? Barely anyone. Consumers are finding subversive ways to take care of themselves and their own, because no one else will.

Stability
Roller coasters were so last year. Today's shoppers, more than ever, will value grounded practicality over the big ups and giant downs of chaos and uncertainty, thank you very much.

Implications on Categories

Money/ Spending
A new thriftiness mainstreams online as consumers beehive in their shopping for the best interest rates, premiums, value and service. Expect more consumers to turn to nontraditional financial-services solutions, such as P-to-P lending, bartering and shared ownership. In a tough economy, financial-services industries need to amp transparency, education and innovation.

Food/ Beverage
Foodies will want to be shown the value in scratch cooking and authentic food; more mainstream eaters will look toward value without regard to quality of ingredients (call it "The Velveeta Syndrome"). Everyone will want to be led to the value in “cooking” at home (whether hardcore or halfway) and stretching meals further. Meanwhile, many of us could use a stiff drink.

Automotive
Car dealerships will close their doors in large numbers over the next year. This will accelerate change in an already morphing marketplace, meaning online comparison shopping will reign for consumers, and car companies will need to pay extra attention to where they place their marketing money.

Travel /Leisure
Flying gets suckier as the number of flights declines and operations go super low-budget. Both business and leisure travelers will learn to accept a staycation mentality for the long haul. Consumers will respond to cheeky value-based humor and armchair-traveling inspiration.

Retail
Coupons rule, especially when they provide a feeling of subversive, savvy reward. Bling is out; practicality in. This holiday season, it’s one gift or none. Think value + customer service as the remedy.

Health/ Beauty
Mental health care is taking a cut just when therapy is needed most. More people can’t pay their hospital bills, and hospitals can’t get the credit to cover wayward patients. Consumers are reducing the frequency of beauty treats like manicures and blowouts. In a nutshell, both healthcare consumers and beauty shoppers want performance bang for their buck like never before.

Media/ Entertainment
Consumers are looking for good CPEH (cost per entertainment hour) value. Gaming has seen a growth spurt just over the last month, largely for that very reason. Expect Dark SideSM escapism to provide an outlet for our fears ("at least my neighborhood hasn't been invaded by flesh-eating aliens from another solar system").

Technology
The Family Cave will get amped for maximum escapist nesting. For holed-up consumers, that high-def TV just might be the smartest purchase this year. Mobile devices and apps will take on a vital role in comparison shopping, as long as consumers have the bucks to keep up with them.

Home/ Garden
Be it ever so humbled (or price-reduced), there still is no place like home. Behind their front door of dreams, consumers are putting off major-appliance purchases, trading down for bargains, looking at DIY options, potlucking, embracing edible gardening and downsizing blueprints as well as carbon footprints.

Entertaining/ Weddings/ Celebrations
Despite economic challenges, celebrations still arrive on their designated day. Lifestage events take on added significance during stressful times. Consumers will cut back on event spending, but not on spending time with those they love.


Implications on Demographic Groups

Millennials
The youngest Gen members grow up in the New Austerity Age, knowing no previous Lush LifeSM (other than stories from their parents). Teens and college students grapple with a new "proceed with extreme caution" talk track from Mom and Dad when it comes to new purchases, while 20-somethings struggle to find jobs in a layoff culture with global competition.

Gen Xers
Used to feeling the squeeze and finding practical solutions, Xers will take a day-to-day mentality into the recession, fluidly changing household spending to fit the financial times and taking — as they always have — small indulgences, fun and luxury where they come.

Boomers
Younger Boomers will open the door to evicted or laid-off kids or defer their dreams of career downshifting.
Older Boomers watch their retirement plans deflate, and scramble to rewrite the future, which likely includes work, work and work.
Matures-Retirements are getting delayed, often indefinitely. Healthcare costs become scarier, and even bankruptcy becomes more likely. Foreclosed homes will put a strain on nursing homes.

U.S. Latinos
Latinos are becoming increasingly pessimistic about their economic situation, as work shifts from full-time to part-time. They're changing their grocery shopping habits to fight rising food prices. The hard-earned realization: The American dream is about not just buying a home, but being able to keep it.

African Americans
Even if credit is loosened again, with better Wall Street and banking oversight, the reversal of fortune for African Americans, exacerbated by the loss of homes, property and small businesses — and their inability to re-attain them anytime soon — may cripple their economic welfare for generations to come.

Asian Americans
Working-class Asian American families wonder why failed businesses and large corporations are being bailed out, questioning the unfairness of having to share in the huge cost.

IT'S THE ECONOMY STUPID? MARKET FACTS (ending week of 10/25/08)

Nearly 6 out of 10 Americans believe another economic depression is likely, according to a poll by CNN/Opinion Research Corp.
Money.CNN.com | 10.6.08


More than 123 million U.S. workers are enduring a “significant decline in overall wellbeing” due to the rocky economy, according to a study by Healthways, which found that 42% say their standard of living is eroding as a result of the economy, up sharply from 31% in January.
Workforce Management | 9.23.08

According to Javelin Strategy and Research, 45% of Americans say that their ability to contribute to savings has decreased because of the faltering economy; 37% say that they're using their credit cards less; and 28% say that paying off their credit card balance has become more difficult.
Business Wire | 7.30.08

The Salvation Army, which operates 1,300 thrift shops in the United States, said the tough economy had led consumers to hold onto their old clothes longer and to use websites like eBay and Craigslist to make money from unwanted items, suppressing the usual flow of donations.
New York Times | 9.10.08

It's 1992 all over again — 'It's the economy, stupid.'
Carleton College political scientist Steven Schier referring to the campaign slogan of then-candidate Bill Clinton and pointing out how crucial the economy has become in the 2008 presidential election, Star Tribune | 9.14.08

What Countries Are The Most and Least Friendly To Small Business?

When Rodrigo Veloso launched One World Enterprises in Los Angeles last year, he quickly grasped why entrepreneurship was surging in the U.S.

"Within a week I had formed an LLC, incorporated in Delaware, and set up bank accounts," says the 28-year-old Brazilian, whose company has secured distribution deals with Whole Foods and Kroger, among other markets, for its natural health drinks made from coconut water and açai juice.

Veloso's experience with ONE World (oneacai.com) served as a happy contrast to the beginnings of his first startup, in Brazil. There it takes an average of 152 days to launch a new business, and Veloso had to deal with seven ministries. As the months dragged on, he began to sweat: His first big customer, a Swedish food wholesaler, was impatient for a shipment of Veloso's gourmet coffee. To keep the order, Veloso wound up hiring an exporter, which ate up the 40% gross margin he would have realized using his own company to handle the shipping. He had little choice.

"Above all else, I needed the customer," he says.

Making it easy to launch a new enterprise is one of the many ways in which the U.S. has led the world in fostering a dynamic entrepreneurial class. Other structural factors, from bankruptcy laws to tax policies and employment regulations, help small businesses thrive here. And those moves have been copied into the playbooks of other nations eager to see their homegrown entrepreneurs create jobs and spur economic growth.

So what are the best countries for entrepreneurs now? Where might American entrepreneurs think about setting up overseas? And where should they keep an eye out for global competitors? Some of the stars - such as Iceland and Denmark - might surprise you. Laggards include India.

Our quest for startup-friendly countries began with the World Bank's Doing Business reports (doingbusiness.org), which every year measure the entrepreneurial climate of 175 nations in two ways: starting and operating a business. But the lists give an incomplete picture. France, for example, ranks in the top 10% for ease of starting a business and in the top fifth for operating one, but it has notoriously low rates of entrepreneurship.

Clearly there was a missing dimension. That brought us to the Global Entrepreneurship Monitor (GEM), an annual study produced by Babson College and the London Business School. Its 2007 High Growth Entrepreneurship Report (gemconsortium.org), due this month, gave us what we needed: a glimpse at national rates of high-expectation entrepreneurship - how many American-style entrepreneurs a country produces.

Those individuals, who can get good jobs, become entrepreneurs because they see a chance to build substantial companies. They aren't starting subsistence businesses for lack of other opportunity. Only 7.4% of business launchers in GEM's 53-nation survey fall into the high-expectation bucket, but such men and women are responsible for 70% of the jobs created by small business. Our list gives equal weighting to the World Bank data and the GEM high-expectation ratings.

Our top four - New Zealand, the U.S., Canada, and Australia - place relatively few hurdles in the path of business owners. In each nation it takes between two and five days to start a business and requires five or fewer steps to do so. Those nations impose relatively low marginal tax rates too. That's critical, says William Bygrave, a professor at Babson and director of the GEM project, because it helps business launchers- and the friends, relatives, and angels who support them - accumulate savings for seed money.

Those nations also have in common legal systems that protect intellectual property, enforce contracts, and provide relatively rapid adjudication of disputes. Poland, which at No. 44 tops our bottom ten, is notorious for its sclerotic courts: To settle a claim of unpaid receivables takes upwards of 1,000 business days.

In general, Latin America fares poorly. Despite efforts to streamline launch processes in Brazil - the World Bank applauds new online systems in some states - it still takes 17 steps to register a business. Brazil has many people starting businesses, mostly entrepreneurs by necessity, but produces ambitious entrepreneurs such as Veloso at less than half the U.S. rate.

Most and least friendly countries to small biz are:

Rank Country FSB Score
1 New Zealand 2.03
2 United States 2.01
3 Canada 1.99
4 Australia 1.93
5 Singapore 1.88
6 Hong Kong, China 1.86
7 United Kingdom 1.85
8 Ireland 1.85
9 Denmark 1.75
10 Iceland 1.75
11 Norway 1.70
12 Sweden 1.64
13 Japan 1.64
14 Finland 1.60
15 Thailand 1.60
16 Chile 1.59
17 Israel 1.59
18 Latvia 1.57
19 Switzerland 1.57
20 France 1.50
21 Jamaica 1.49
22 Netherlands 1.45
23 Belgium 1.45
24 Germany 1.37
25 Portugal 1.36
26 Peru 1.33
27 South Africa 1.32
28 Malaysia 1.31
29 Colombia 1.29
30 Russia 1.29
31 Austria 1.28
32 Mexico 1.26
33 Turkey 1.26
34 Korea 1.25
35 Czech Republic 1.24
36 Italy 1.20
37 Taiwan, China 1.15
38 Spain 1.11
39 Hungary 1.11
40 Slovenia 1.10
41 Uganda 1.05
42 China 1.05
43 Argentina 1.04
44 Poland 1.02
45 Croatia 0.95
46 India 0.94
47 Jordan 0.94
48 Uruguay 0.92
49 Ecuador 0.92
50 Brazil 0.92
51 Philippines 0.90
52 Greece 0.76
53 Indonesia 0.61

THE DECISIVE LATINO VOTE IN TIMES OF CRISIS

THE CRISIS ("LA CRISIS") ON TAMPA BAY

Located in Downtown Tampa, Ybor City neighborhood is a densely populated residential and commercial area. Sitting at the far end of a three-block-long business district filled with colorful Latino storefronts is a modest mobile phone franchise. Owner Rosario Lorenzo stands at the counter of the small store, surrounded by cellphones and PDAs, but no customers.

In the nine months she's been in business, service activations (Lorenzo's an independent Sprint dealer) have dropped from about 10 a day to about 2 per week. Sales of phones priced over $200 have also dried up. Spending about $50 for a phone is the new norm for his customers, who’ve seen their hours as landscapers, cooks and construction workers cut in half.

"Es la crisis," she says. It's a term that until recently had been left out of the mainstream media's coverage of the global economic downturn. But Latinos like Lorenzo have been uttering it for months, and she's feeling its effects firsthand. She, like other business owners, is trying to amp value and service like never before.

The $700 billion rescue plan? "If Wall Street needs help, what can we do?" she said. "But I tell Obama and McCain: 'Think of small businesses. We need a solution, too.'" Rosario places her tense hands on the counter and looks toward the door. . . worried. . . praying and waiting for a customer to come in on this hot October afternoon.

According to a Pew Hispanic Center study, 63% of Latino immigrants say that the situation of Latinos in the U.S. has worsened over the past year. In 2007, just 42% of all adult Hispanic immigrants — and 33% of all Hispanic adults — said the same thing. MIAMI HERALD | 9.27.08

Focus of my presentation at "The International Convention of Green Entrepreneurs."

"Becoming a "Best Run Business"

Do you want to focus on growing your business but instead find yourself dealing with a flood of daily operational details, ad hoc requests for information, and nonstop competitive moves?

Meeting these challenges is difficult and time-consuming and often not productive. Many reports on start up business failures cite poor operational management as one reason for failure. New business owners frequently lack relevant management and business systems expertise in areas such as finance, purchasing, selling, production, and inventory control.

Business owners must have access to the information they need in order to make prompt and decisive decisions in today economy. When key pieces of information reside in different, distinct systems or locations, response times can lag and create customer dissatisfaction. Disjointed sales, accounting, and operational processes inevitably result in bottlenecks and reduced productivity. Successful entrepreneurs recognize that one their responsibilities to the new business venture is to ensure that it has a sufficient operational platform for the growth of the firm. We will look at some of the ways a company can implement practices of a "Best Run Business" including using proven software tools.

IN TIGHTENING ECONOMIES, MARKET INTELLIGENCE BECOMES A MUST

Record high oil prices, rising food costs, the US mortgage crisis, weak financial markets and global inflation all characterize 2008, rattling the very essence of our consumption-driven economies. These difficult times make us rethink our habits as both consumers and as business people operating in the broader global play. Just as shifting economic currents are molding consumption habits, so too are they challenging companies to rethink their modus operandi.

LATINOS: Weak Economy + Increased Enforcement = Less Immigration

WHAT'S HAPPENING

After averaging about a million immigrants annually since 1990, the U.S. added less than half that in 2007 due to a slowing economy and increased enforcement, according to U.S. Census estimates (SLTrib.com 9.23.08).

The bureau's 2007 American Community Survey estimates that although immigrants in the U.S. number 38 million, an all-time high, the nation added only half a million in 2007, down from more than 1.8 million in 2006.

Fourteen states, including New Jersey, New Mexico, Vermont and South Dakota, showed declines from 2006 to 2007, as did Atlanta, Las Vegas and Oakland, CA. Cities showing gains included Phoenix, Boston and Denver.

WHAT THIS MEANS TO BUSINESS

As the economy continues to weaken, picking up roots and making the move becomes a less welcoming prospect as immigration, and where immigrants decide to settle, continues to be driven by the availability of jobs. Stricter enforcement, at both the border and the workplace, deters illegal entry and leads to returns to home countries.

Brands dependent on the continued flow of immigrants and their ties to home country behaviors and values must adjust their strategies.