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A Difficult Economy What Should We Do?

A Difficult Economy What Should We Do?. Asa J. Beck, CPA President, Cogent Strategies, LLC Member of Policy Committee, Coalition for a Prosperous America. Cogent Strategies. What is Happening?. The economy is in for a slow uneven recovery Some banks are headed for trouble, again

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A Difficult Economy What Should We Do?

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  1. A Difficult EconomyWhat Should We Do? Asa J. Beck, CPA President, Cogent Strategies, LLC Member of Policy Committee, Coalition for a Prosperous America Cogent Strategies

  2. What is Happening? Cogent Strategies, LLC www.cogentstrategies.com The economy is in for a slow uneven recovery Some banks are headed for trouble, again Unemployment is and will likely stay high There will be very modest growth this quarter The trade deficit is rising again The federal deficit is out of control The dollar will continue to weaken You can take steps to do well, even now

  3. Five Things to Remember! Cogent Strategies, LLC www.cogentstrategies.com Have or create a cash reserve Be profitable and cash flow positive Spend your money close to home Grab opportunities in a poor economy Speak up, do not be quiet with your representatives

  4. The Banking System Cogent Strategies, LLC www.cogentstrategies.com • Data is from the Federal Reserve http://www.federalreserve.gov/releases/h8/data.htm

  5. Deteriorating Condition of Creditors Charge offs total 2.44% and Delinquencies are 6.86% overall. Data is from the Federal Reserve http://www.federalreserve.gov/releases/chargeoff/ Cogent Strategies, LLC www.cogentstrategies.com

  6. FDIC Bank Profits Cogent Strategies, LLC www.cogentstrategies.com

  7. FDIC Troubled Banks and Fund Balance Cogent Strategies, LLC www.cogentstrategies.com

  8. Economic Factors – U6 Unemployment Source : Bureau of Labor Statistics http://www.bls.gov/webapps/legacy/cpsatab15.htm This measure includes those who have not looked for work in last four weeks and those that have part time jobs for economic reasons Nov 2010 17.0% Cogent Strategies, LLC www.cogentstrategies.com

  9. Economic Factors – Manuf. Employment Source : Bureau of Labor Statistics http://www.bls.gov/iag/tgs/iag31-33.htm Manufacturing employment has fallen precipitously 5.554M jobs in 10 years. Seasonally adjusted the total is 11,648,000 at the end of November. Cogent Strategies, LLC www.cogentstrategies.com

  10. Economic Factors – Total Employment Source : Bureau of Labor Statistics http://www.bls.gov/webapps/legacy/cpsatab9.htm Total full time employment has fallen 10.948M since November 2007 Cogent Strategies, LLC www.cogentstrategies.com

  11. Economic Factors – How Many Jobs Cogent Strategies, LLC www.cogentstrategies.com Full Employment is the goal 4% unemployment At 9.7% unemployment, we need 8.7M jobs (153.9M in workforce, 138.9M employed) At 16.7% U6 unemployment (including discouraged workers), we need 19.7M jobs Another 14M people will enter workforce by 2018, so we need 28M jobs by then

  12. Economic Factors - GDP • Source : Bureau of Economic Analysis http://www.bea.gov/national/index.htm#gdp Cogent Strategies, LLC www.cogentstrategies.com

  13. Economic Factors – New Home Sales New home sales were at a record low level in August and not much better now • Source : US Census Bureau http://www.census.gov/const/soldreg.pdf Cogent Strategies, LLC www.cogentstrategies.com

  14. Economic Factors - Manufacturing • Source : US Census Bureau http://www.census.gov/cgi-bin/briefroom/BriefRm Cogent Strategies, LLC www.cogentstrategies.com

  15. What Can We Do – Cash and Profits The economy continues to struggle • Have a cash reserve • If you don’t have one, create one • Borrowing to create a Business cash reserve is ok • Conserve capital and contain costs • Be sure you make a profit with positive cash flow

  16. So What Can We Do – Adjust Business • 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 Cogent Strategies, LLC www.cogentstrategies.com

  17. So What Can We Do - Measure 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 • Have Key Performance Indicators (KPIs) • Measure & adjust, then do it again Cogent Strategies, LLC www.cogentstrategies.com

  18. What Can We Do – Improve team • “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 • Perform for the short-term, plan for the long-term • Be ready for a long recovery

  19. Trade and Industrial Base are Key • Source : Bureau of Economic Analysis http://www.bea.gov/briefrm/gdp.htm Cogent Strategies, LLC www.cogentstrategies.com

  20. Our Borrowing is Out of Control Estimates for 2010 are from the Congressional Budget Office October 7, 2010 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 Cogent Strategies, LLC www.cogentstrategies.com

  21. US Dollar Will Continue to Weaken 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. Source : US Federal Reserve http://www.federalreserve.gov/releases/h10/Summary/ Cogent Strategies, LLC www.cogentstrategies.com

  22. Government Policies Impacting Economy • Demand 90% of our money be spent here • Be active and help drive change • Countries continue to manipulate their currencies, seek correction • 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 Cogent Strategies, LLC www.cogentstrategies.com

  23. 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 Cogent Strategies, LLC www.cogentstrategies.com

  24. A Humorous Note Cogent Strategies, LLC www.cogentstrategies.com

  25. Spend Money Domestically 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 • The challenge, 90% of spending on USA Cogent Strategies, LLC www.cogentstrategies.com

  26. Dollar Weakening Requires Change • 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 • Buy from a US company if you can, but at least buy US made products Cogent Strategies, LLC www.cogentstrategies.com

  27. Summary Have or create a cash reserve Be profitable and cash flow positive Spend your money close to home The challenge 90% of spending on USA Take advantage of the opportunities of a poor economy Be vocal with your representatives Get the help that you need Help me spread the word to others Cogent Strategies, LLC www.cogentstrategies.com

  28. Questions and Answers • www.denverbusinessadvisors.com • www.cogentstrategies.com • Contact information: Asa J. Beck, PresidentCogent Strategies, LLC303-459-4870AJBeck@CogentStrategies.com See links on our site for American Products Cogent Strategies, LLC www.cogentstrategies.com

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