The James Dicks Blog

I know it’s been tough the past couple of years and you’ve probably experienced some financial losses along the way, which could include a loss of equity in your home (or the loss of your home through foreclosure), your investments have probably taken a beating, and your 401(k) is no longer a viable option for your retirement future. If you were saving for your children’s education, that may have been put on hold, at least for the foreseeable future. Vacations? Forget about it….at least for now.

Remember, you may be down but you’re certainly not out by a long shot. Time to start the rebuilding process and the sooner the better. The faster you start, the more time you’ll have to put away the cash, the assets, the peace of mind before you really need it. But what to do first?
You might look back and try to remember where you started when you first left home or when you first got married. Chances are you began by putting away what you could in a bank savings account. That is probably a good place to start now.

Recently an economist said that average U.S. household wealth is down almost 20 percent from its pre-recessionary financial crest three years ago. There has been no reduction of U.S. household wealth in the last 50 years that has even come close to touching this loss. Many of those who supposedly know (government officials, economists and the like) are starting to believe that the “Great Recession” has probably seen its worse and investors are beginning to get restless about standing on the sidelines. But, many more are not yet interested in getting back in yet. There are fears that they might run into a second phase of this recession period and take another big hit. And others are getting nervous about the possibility of losing out on something big when things do begin to look clearer economically.

So what should we do? The answer to that question is very personal – it’s your money and that means its entirely your decision. But let me just throw out a few facts that may help you make some very important decisions.

Many people I talk to are ready to jump back into stocks. The negative or positive activity experienced by the stock market is normally guided by the strength or the weakness of the U.S. economy. When our economy begins to expand and the chances of inflation are relatively slim, the stock markets tend to thrive. Today, I don’t think we know the answer to either of those questions because growth and inflationary questions remain persistent today.

I don’t know about you, but I’ve been hearing lots of advertisements about investing in commodities these days, specifically gold. During periods of inflationary pressure, the commodity sector has been where many people go to find a financial refuge. Although gold has been showing some considerable strength, it has also shown itself to be rather stagnant over the last few months – not gain or losing much in the process. The Fed has stated this year that if inflation begins to show itself while our national economy continues to be on the mend, they will pull back some of the liquidity they’ve put out there in order to slow it down. This will indeed have a great impact on commodity pricing.

So where to go? Back to that savings account at the bank that hardly pays anything as far as interest is concerned. Or maybe its time to remain on the sidelines and get involved in CD’s or other interest rate vehicles. While these types of investments aren’t very lucrative, you can be sure of one thing…you’re probably not going to lose in the process either.

Are you in a mood to take a chance or are you in preservation mode right now? Remember the old adage – “You pay your money and you take your chances.” But the chances we are experiencing today are not like anything this generation has ever seen. Getting back in or staying on the sidelines is a decision that each one of us must make independently and not by the flipping of a coin. Get educated and make sure the decision you ultimately make is one you can personally live whether your investments go up or whether they go down.

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Today’s world is extremely challenging. We are fighting wars on multiple fronts and the need for more troops is becoming an ever-growing reality. National Guard and Reserve forces are being used more and more to not only fill in the gaps, but also, in many cases, to become the primary source of personnel in the field. This leaves American business with less manpower to get the job done in an extremely weak economy. Both sides have important issues to confront and many times its difficult to deal with them equitably.

There’s an organization that I’d like to introduce you to whose mission it is to support American business’ challenge of coping with the current mission of our National Guard and Reserve forces. It’s called the Employer Support for the Guard and Reserve (ESGR) and as their mission statement says, they are charged with developing and promoting “employer support for Guard and Reserve service by advocating relevant initiatives, recognizing outstanding support, increasing awareness of applicable laws, and resolving conflict between employers and service members.” In other words, ESGR helps American business to understand how to best support these gallant military members while on active duty while making sure they understand the laws protecting their jobs once they return.

ESGR is a Department of Defense organization and is a staff group within the Office of the Assistant Secretary of Defense for Reserve Affairs, which is in itself a part of the Office of the Secretary of Defense. In our current economic and wartime environment, the Department of Defense recognizes that civilian employers play a critical role in the defense of the nation by complying with existing employment laws protecting the rights of workers who serve in the Reserve component.

ESGR does this through the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), which is a federal law that is intended to ensure that persons who serve in the Guard or Reserve are not deprived in their civilian careers because of their service and are quickly reemployed in their civilian jobs upon their return from duty without discrimination. If there is a problem or dispute, ESGR is there to help at the business or service member’s request. ESGR has trained ombudsmen who can help negotiate a solution between the parties concerned.

Many business have voluntarily signed ESGR Statements of Support to help ESGR in promoting understanding of the Guard and Reserve members who work for these companies, to develop human resources policies that support employer participation in Guard and Reserve programs, and to voluntarily comply with USERRA which enforces the rights of those called to active duty in time of war or emergency.

It’s tough for everyone – the military service member, the family that is left behind when their loved ones are deployed but it’s also tough for a business that must keep producing with less manpower. ESGR is there to help.
ESGR was established in 1972 and today, operates through a network of thousands of volunteers throughout the United States and Guam, Puerto Rico and the Virgin Islands. If your business would like more information about ESGR, call 800-336-4590 or email USERRA@osd.mil.

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As a business owner, I can tell you from firsthand experience that this year’s recession has created some very challenging experiences. In order to sustain what you have, business today must be extremely creative. This productive imagination will feel, at times, like it’s the only thing standing between you and complete corporate annihilation. But that’s ok; I’m sure many of you know exactly what I’m talking about. And this isn’t just a phenomenon that small business is experiencing; many of the world’s largest companies are feeling the same squeeze on a daily basis.

As exciting as this very historical economic year has been, in order to get through it successfully, you can’t wait for something to happen. You must do something productive but since none of us have ever experienced anything that compares with the past 18 months, there is nothing for us to imitate to get back on the right side of economic well-being. Because of this fact, I consider all of us pioneers. We are all blazing a trail through this economic downturn with the ultimate goal of survival. So, I thought I’d share a few thoughts with the rest of you in the global business community to see if my observations can help you blaze your own trail to prosperity.

Because of the double digit unemployment rate, consumer spending has continued to drop sharply. We have seen a customer base shrivel up due to the high unemployment rate and the fear of letting go of the cash they currently have in their bank accounts. Without assurance that the current recession is behind them, any potential customer is unlikely to make a purchase except what they consider to be vital to their survival. So, it is imperative for you to find new solutions for your customer to overcome the current problems they are facing. The economy has changed and so have the needs and the habits of the consumer. Develop new, innovative methods of selling your product. That might be nothing more than to have your sales staff make extra contact with potential buyers by making more cold calls. Do your research.

The fact still remains; cash is king and your need for capital has never been more important. During the best of times, when things are easier, we sometimes forget that our businesses must earn a return on capital that exceeds our capital’s cost. Today, banks are reticent to loan any cash and assets have lost much of their value. That’s why it’s ultimately important during the “good times” to stash as much capital as possible….it is like the proverbial saving for a rainy day. In the meantime, develop a plan of raising as much capital as possible, while determining the best places to use these expenditures to enhance your growth potential. There probably will be corporate cutbacks, layoffs, salary cuts, and a drastic decrease in inventory. Make a clear cut determination of how you will locate and use your capital to the benefit of the company.

I always say that a company is nothing more than a group of talented people who are all working for the same ultimate goal. The key words here are “talented people” and in today’s business community, there are so many highly-qualified people who find themselves without employment while others have become very disenchanted with their current situation(s). It’s in times like these when you can put together a “dream team” so when economy does start to turn, you’re ready.

And even though things aren’t perfect today, you need to keep investing in the very core of how your company operates. Once this recession is over (and many say it’s already starting to make that turn) your company must already be prepared to jump into the fray to continue growing the business. So even during the tough times, you cannot stop funding the critical priorities that made your company move forward and excel in the past; areas like customer service, training or business development need to continue expanding. It’s amazing how many companies just stop funding these critical areas and allow everything to come to a screeching halt while waiting for better times. There has never been a better time than now to insure that your company has the best possible footing to survive the next wave of economic movement, whether positive or negative.

I know that every business has its own story and some are doing better than others in today’s economic environment. But there are situations that must be sustained in order to keep a business from sinking into the quagmire of today’s miserable economy. My primary advice comes from the beginning of this piece; in order to survive develop a highly creative nature that will allow you and your team to consider every possible scenario. Do this and your survival rate will greatly increase.

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The holiday season is normally a time when we can enjoy our happiest memories of childhood but these same holidays are also the period of time that typically generates the greatest amount of sales for the nation’s retailers. The consumer is “King” at the nation’s retail centers, which throughout the year supplies two-thirds of our national economic growth. But because this year has been tough at the nation’s retail centers, consumers are especially important during this year’s fourth quarter.

Many retailers attribute 25 to 40% of their annual sales to “Black Friday” (the Friday after Thanksgiving), which is normally a fairly solid gauge as to what the rest of the holiday shopping season will look like. In addition to “Black Friday,” we now recognize the following Monday as “Cyber Monday,” as the beginning of the online shopping season. For many retailers that are already close to ruin, the 2009 holiday shopping season is very likely to tell the story. It could be the final blow for a number of the nation’s retailers and mall operators, already feeling the negative influence of a diminished year for retail sales.

As I shared with you recently, the national spending habits of American consumers have certainly been altered over the past 18 months and the traditional attitudes that the buying public had in the past are forever changed. This means that the nation’s retailers will also have to make some changes in order to cater to the newly formed buying habits of their customers. The plans at the retail centers for this holiday season appear to be centered on traditional values and bringing family together since that appears to be the major desire of the typical shopper this year. Smaller holiday gift giving and more time focused on the important things in life – time with family.

Stores are still hurting from last year’s’ holiday shopping season, which economists say was the weakest buying period since 1967, when the Commerce Department started collecting such data. The feeling is this year could be worse. Consumers with worries about being laid off or reduced hours at work plus lower credit lines are contributing to the dwindling consumer interest in spending this holiday season.

The retail centers will be displaying more things like gingerbread houses while using the traditional red, green and gold holiday colors to touch the current mood of today’s consumer. We’re all looking back when life was easier, safer, and perhaps even happier; those are the values that will certainly attract this year’s holiday buyers.

And according to a recent survey by Information Resources Inc (IRI), about 77 percent of American holiday shoppers said that while they didn’t spend much on the holidays last year they are more willing to open their wallets a little wider this year. The respondents added that they will continue to search for discounts whenever possible. According to IRI “functional gifts such as iPods, Blu-ray players for less than $99, Smartphone’s and clothes such as sweaters and jackets will likely top gift lists.”

There are indicators that suggest the U.S. economy may be coming to the end of its worst days, many consumers remain concerned by limited credit, high unemployment and home foreclosures. The new American consumer continues to save at historically high levels while paying their down debt. Just examining those concerns imply that we could experience yet another challenging holiday season for the nation’s retailers.

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An economist once told me that the factual “story” behind any economic report or event is almost entirely based on sociology, the study of how human society actually operates and reacts to outside actions. It is certainly apparent that when the economy is either “booming” or “busting,” the spending habits of the global consumer normally change dramatically.

Those who watch our national economic situation know that our nation’s economic foundation is based on whether the American consumer is in a spending mood; two-thirds of our national economy is based on whether the public is willing to spend their hard-earned dollars at the nation’s retail centers, car dealerships, or within the service industry sector. But when things start to go bad, as they have over the past 18 months, spending habits can change drastically, damaging the economic infrastructure until consumer confidence finally starts to mend.

There are some economists and business leaders today who believe that the current global recession has not only forced consumers to prioritize their spending habits but it may have changed the consumer consciousness to the point that American businesses will have to determine whether or not they are dealing with a customer base with an entirely new spending attitude. Some business leaders believe that is the case.

The CEO of the J.C. Penney Company recently gave an interview to voice his concerns about today’s shifting consumer behavior. Myron Ullman recently said that the U.S. consumer has a lot of anxiety and is very concerned about how upcoming changes in healthcare may affect their finances in the immediate future. He continued by saying that consumers are suddenly coming to the realization that “they may need to save more than they had originally planned. Their spending habits have changed to reflect this for the foreseeable future.”

He’s not alone; the corporate leadership of Best Buy, Drugstore.com as well as CEOs from the service industry (Hotels, Theme Parks, Restaurants, Rental Car Services) are all starting to realize that the U.S. consumer may never return to the spending habits of the past and that a change in their selling and advertising strategies might be necessary.

While people will continue to consume, they question now is what will they buy, when will they buy and where will they buy. Name brand products are taking a backseat to generic or store brand items. Malls are beginning to show signs of weakness – more and more stores are closing while consumers make their way to other, cheaper alternatives. Instead of going to one of the major mall’s “anchor stores,” they are now heading to places like Wal-Mart, Target or K-Mart to purchase the things their families “need” rather than the things their families “want.”

The economy is beginning to show signs of life for the first time in many months. Consumer spending was up in August by the most since 2001, indicating the biggest part of the economy is starting to rebound from its worst slump in almost 30 years. The 1.3 percent increase in purchases was larger than forecast and followed a 0.3 percent gain in the prior month that was bigger than previously estimated. By the way, incomes were also up at a 0.2% rate.

While all that may be true, the level of consumer confidence continues to be the key question. As I mentioned earlier, economics is all about sociology and until the American consumer starts to feel more positive about spending their money at the “corner store,” restarting the U.S. economy will just have to wait.

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