economy 9 17 2009

A Difficult Economy

What Should We Do?

CogentStrategies

Asa J. Beck, CPAPresident, Cogent Strategies, LLC

Member of Policy Committee, Coalition for a Prosperous America

What is Happening?Cogent Strategies, LLC www.cogentstrategies.com

•The economy will improve, it will be bumpy

•Some banks are headed for trouble, again

•Unemployment is high and will likely go up

•Their should be growth in this quarter•The trade deficit is better, but still high•The federal deficit is out of control •You can take steps to do well, even now

The Banking SystemCogent Strategies, LLC www.cogentstrategies.com

Data is from the Federal Reserve http://www.federalreserve.gov/releases/h8/data.htm

Deteriorating Condition of Creditors

Cogent Strategies, LLC www.cogentstrategies.com

Data is from the Federal Reserve http://www.federalreserve.gov/releases/chargeoff/

Economic FactorsCogent Strategies, LLC www.cogentstrategies.com

Source : Bureau of Labor Statistics, Current Population Survey http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?request_action=wh&graph_name=LN_cpsbref3

Source : The Conference Boardhttp://www.conference-board.org/economics/ConsumerConfidence.cfm

Unemployment is a lagging indicator it should go higher before it is through

Economic Factors – U6 Unemployment


Source : Bureau of Labor Statistics http://data.bls.gov/PDQ/servlet/SurveyOutputServlet

This measure includes those who have not looked for work in last four weeks and those that have part time jobs for economic reasons

Economic Factors – Manuf. Employment


Source : Bureau of Labor Statistics http://data.bls.gov/PDQ/servlet/SurveyOutputServlet

Manufacturing employment has fallen precipitously over 5M jobs in 10 years


Source : Bureau of Economic Analysis http://www.bea.gov/briefrm/gdp.htm


Source : US Census Bureau http://www.census.gov/const/soldreg.pdf


Source : US Census Bureau http://www.census.gov/cgi-bin/briefroom/BriefRm

What Can We Do Make AdjustmentsThe economy continues to struggle

• Have a cash reserve• If you don’t have one, create one• Borrowing to create a cash reserve is ok• Conserve capital and contain costs• Be sure you make a profit with positive cash

flow

So What Can We DoCogent Strategies, LLC www.cogentstrategies.com

A crisis is a terrible thing to waste• Disruptive circumstances provide

opportunity to look at your business in new ways. Change your perspective.

• Be assertive, go after the clients and business

• Your business will require active management just to keep pace


Understand your business.• Assess what your customers truly value• Make a new plan based on today’s reality• How are you better than your competition• Measure & adjust, then do it again

• “Do what you should have been doing all along”• Be sure you hold on to your best people

• Train or coach those who are good• Consolidate positions or replace others

• Have Key Performance Indicators (KPIs)• Perform for the short-term, plan for the long-

term• Be ready for a “Double Dip” recession

What Can We Do Make Adjustments

• Provide free professional services in law, accounting, management, and Sales/Marketing

• Maximum of three hours for each company from each person in a two month period

• Can help businesses that need a little guidance

• It is their way of giving back to the community• www.denverbusinessadvisors.com• Details are listed on the web site

Denver Business Advisors

Trade and Industrial Base are KeyCogent Strategies, LLC www.cogentstrategies.com

Source : Bureau of Economic Analysis http://www.bea.gov/briefrm/gdp.htm

Our Borrowing is Out of ControlCogent Strategies, LLC www.cogentstrategies.com

Source : White House Office of Management and Budget http://www.whitehouse.gov/omb/budget/Historicals/ US Census Bureau, Foreign Trade Division http://www.census.gov/foreign-trade/statistics/historical/gands.txt

Estimates for 2009 are based on the Trade Deficit for the first seven months of 2009 as an estimate of the full year. The Federal deficit is for the fiscal year ending 9/30/2009 supplied by the Office of Management and Budget.

US Dollar Will Continue to WeakenCogent Strategies, LLC www.cogentstrategies.com

Source : US Federal Reserve http://www.federalreserve.gov/releases/h10/Summary/

The value of the US Dollar will continue to fall in relation to other currencies due to are large deficits making imports more expensive and domestic products more competitive over time.

Government Policies Impacting Economy


•Be active and help drive change•Countries continue to manipulate their currencies•Border adjustable Value Added Taxes add to the challenge•Imports need to be held to same standards of quality and safety as domestic companies•Push back on anything that will raise expenses or increase debt

We Must Make More of What We Use


From international Monetary fund 1980 to 2008 http://en.wikipedia.org/wiki/File:Cumulative_Current_Account_Balance.png

Trade Balance by CountryCogent Strategies, LLC www.cogentstrategies.com

From United States International Trade Commission http://dataweb.usitc.gov/scripts/cy_m3_run.asp

Country Imports Exports Balance

Millions of Dollars 2008

China $337,504.2 $67,165.9 ($270,338.4)

Canada $334,839.6$222,424.

4($112,415.

2)

Mexico $216,328.4 $131,507.4 ($84,821.0)

Japan $139,112.3 $61,435.2 ($77,677.1)

Germany $95,827.9 $50,150.5 ($45,677.4)

Saudi Arabia $54,282.8 $11,845.8 ($42,437.0)

Venezuela $50,281.2 $11,829.3 ($38,451.9)

Nigeria $38,236.2 $3,990.6($34,245.6

)

Ireland $31,298.1 $8,080.1($23,218.0

)

4759.--Italy $36,015.2 $13,896.4($22,118.7

)

Country Imports Exports Balance

Millions of Dollars 2008

Netherlands $21,102.5 $37,076.2 $15,973.7

United Arab Em $1,267.5 $14,620.0 $13,352.5

Australia $10,534.8 $20,948.2 $10,413.4

Singapore $15,718.5 $25,655.5 $9,937.0

Hong Kong $6,496.3 $15,880.9 $9,384.6

Belgium $17,378.5 $25,768.7 $8,390.2

Turkey $4,641.1 $10,277.1 $5,636.0

Panama $373.7 $4,614.6 $4,241.0

Egypt $2,343.6 $5,969.8 $3,626.3

Chile $8,182.3 $11,366.5 $3,184.3


With Weakening Dollar Buy Close to Home• It is not easy, but usually you can• Think of your spending like votes• Japan, Germany, & UK Manufacture, why• Citizens buy in their own self interest

• Food, meat, produce, and dairy• Automobiles, computers, & yard equipment

• As dollar weakens, imports will cost more


• Find a domestic source for products• If they are too expensive buy a little now• Bring any off shoring of jobs back home• Labor is more than just rate it is units too• Getting ahead on labor while unemployment

is high will be viewed later as a smart move

Summary

•Be profitable and cash flow positive•Tune up your business now•Keep close to your customers•Performance will mean cost controls, how is

important•Have a cash reserve and preserve it carefully•Spend your money close to home•End labor off shoring while labor is plentiful


• Questions and Answers

• Contact information:

Asa J. Beck, PresidentCogent Strategies, [email protected]


economy 9 17 2009

Documents

economy cogent strategies

key cogent strategies

control cogent strategies

us census bureau http

us federal reserve http

wh source

economic reasons

federal deficit