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Small Business Warns "Not A Good Time To Expand Substantially"

Tyler Durden's picture





 

Submitted by Lance Roberts of STA Wealth Management,

 

 


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Thu, 01/16/2014 - 16:08 | Link to Comment NoDebt
NoDebt's picture

If there is only one chart that looks like how things actually feel, it's that one showing small business confidence.

Thu, 01/16/2014 - 16:07 | Link to Comment Meat Hammer
Meat Hammer's picture

That's like saying 1939 was really not a good time to be a Jew in Europe.  A bit of an understatement.

Thu, 01/16/2014 - 16:12 | Link to Comment TeamDepends
TeamDepends's picture

And we are contemplating starting a business!  Someone get us into a straight-jacket quick.

Thu, 01/16/2014 - 17:14 | Link to Comment Spigot
Spigot's picture

I would suggest any new, small product oriented business review its business plan and align more closely with the "Casio Model". 1 or 2 people (at most) running the core business, design, marketing then farm out the production and distribution. Build it till you can sell it then sell it. Wash, rinse, repeat.

If it's a service industry thing, align with social trends: driving drunks home, cleaning up after fires, providing low cost burial services, towing services. Sorry, but the fact is that our social fabric is coming undone and the sad results of people trying to drowned their troubles, seeking means to get insurance pay outs, untimely deaths and repossessions of real property are on the upswing.

Thu, 01/16/2014 - 16:14 | Link to Comment shepherd
shepherd's picture

Cry me a river.

Thu, 01/16/2014 - 17:19 | Link to Comment PeterLemonJello
PeterLemonJello's picture

Cry me a river for being exterminated? What the F are you even talking about?

Thu, 01/16/2014 - 17:45 | Link to Comment Seize Mars
Seize Mars's picture

Claude Henry Smoot
S-m-o-t-t. Smoot.

Thu, 01/16/2014 - 16:21 | Link to Comment PrecipiceWatching
PrecipiceWatching's picture

As a small businessman, I feel the crosshairs on my ass.

Expand?  Hilarious.  Not even remotely on the map.

Instead, I'm putting up shields, ramparts and a deep moat, against the harvesting of my productivity by the thieving political enablers of the Free Shit Army

 

 

 

Thu, 01/16/2014 - 16:37 | Link to Comment Bobbyrib
Bobbyrib's picture

Even if they weren't giving shit away to the FSA, they would be taxing you, because they perfectly well understand that it is theft. We may never see a balanced budget again in our lifetimes. I myself have never seen one in mine (not counting Clinton raping Social Security funds).

Thu, 01/16/2014 - 17:27 | Link to Comment PrecipiceWatching
PrecipiceWatching's picture

They've already taxed and regulated me at a level much greater than that imposed on private citizens.

The Free Shit Army comment is just my take on the Abuse du Jour; the latest incredible lunacy on this seemingly relentless American downward spiral.

Why should I roll out of bed everyday, listen to whining patients and staff, only to have the Collectivists siphon off a huge percentage of the cream right off the top, so that generationally lazy parasites can sleep 'til noon and then hit the Casinos.

My Screen Name on other Conservative sites is JohnGalt, for a very good reason.  Going to the Gulch soon.

 

Thu, 01/16/2014 - 17:33 | Link to Comment Vashta Nerada
Vashta Nerada's picture

We have become the first nation in history where the elite work their asses off in order to give the underclass a life of leisure.

Thu, 01/16/2014 - 19:35 | Link to Comment LooseLee
LooseLee's picture

"so that generationally lazy parasites can sleep 'til noon and then hit the Casinos".

Make sure you understand who the 'real' parasites are. Hint: They reside in Manhatten (work at Broad/Wall) and Washington, DC.

They may not sleep til noon, but they hit the 'casino' about 8am.

If you do not understand this, you do not understand, period!

Thu, 01/16/2014 - 20:04 | Link to Comment PrecipiceWatching
PrecipiceWatching's picture

"Understanding" both species of the parasites that are destroying America,  is not a mutually exclusive exercise.

Oh.....(!)

Thu, 01/16/2014 - 17:19 | Link to Comment Spigot
Spigot's picture

Siphon off as much as you can, then go Galt when the confiscation turns ugly. A nice camp in the woods on a pond works well. Once the disolution runs it's course, you'll be in far better shape to restart.

Thu, 01/16/2014 - 17:31 | Link to Comment Oldwood
Oldwood's picture

Siphon hell! I have to embezzle from myself just to pay my mortgage. My small business represents a constant low level sucking noise that if ignored, threatens to take me under. Prices for much of what we need is going up which just forces me to more frugality. I'm lucky in that all my machinery and building are paid for but as such it allows me a certain level of illusionary profits. When the roof goes and the machinery breaks down, profit is a long lost concept. Just hanging on like so many others, hoping against a great confidence that this is all coming down.

Thu, 01/16/2014 - 17:53 | Link to Comment PrecipiceWatching
PrecipiceWatching's picture

Empathize and hear you, loud and clear, sir.

Thu, 01/16/2014 - 17:57 | Link to Comment Spigot
Spigot's picture

Sir, the rich have been doing that for generations. Time for you to join in.

Case in point: I will not give my source, but during the 1960's Grants Dept Stores went bancrupt due to theivery (so was claimed). The case was handled by local police investigators, who found, ultimately, that the owners were the ones arranging for the thefts and then getting the procedes from the sale of those goods on the black market. Once the preliminary report was shared, within a week the investigators were pulled off the case and the case was determined to be "unresolved".

90% of thefts are management stealing from the company. The remaining 10% are customer and low level employee thefts. The trick is to make sure the focus stays on the 10% ... so the 90% can keep up the good work.

Thu, 01/16/2014 - 17:59 | Link to Comment starfcker
starfcker's picture

come on  oldwood, quit crying. nothing wrong with your business that doubling the minimum wage can't fix. and what about obamacare? it'll make you more competitive. wait.....having some trouble with my calculations here. $4.00 gas, that will help, right? you didn't build that. i'm getting confused. beats the fuck out of me. FORWARD!!!

Thu, 01/16/2014 - 17:55 | Link to Comment PrecipiceWatching
PrecipiceWatching's picture

Working very hard on that, but it is increasingy tough to stash even with a high income, when I am punished more, the harder I work.

I dream at night of a farm with fertile soil, stocked ponds, a well, a small orchard, some livestock and a chicken coop.  Actually, very actively shopping for that as time permits.

I know farming is work.  I can work with ANYONE, and it would be a welcome privilege, and refreshing change to do honest, rewarding toil, more directly among God's magnificent bounty.

Thu, 01/16/2014 - 18:04 | Link to Comment Spigot
Spigot's picture

Plant one seed and it will produce hundreds. Plant 1 tomato and it will produce 15-30# Plant 1 potatoe and it will produce 10-20#. Raise 1 goose and it will return you 15# of meat.

The rate of return is food security, peace and a life well lived. And the government can't tax you for doing for yourself, can it? Bonus 30-50% saved :)

Plant an apple tree for $25. In 5 years your tree will begin to yeild more than $25 worth of apples ... or save $8000 and deposit it in a T yeilding 3%, then buy 1 apple a day...

Thu, 01/16/2014 - 22:20 | Link to Comment Dr. Destructo
Dr. Destructo's picture

Find a community garden nearby. Where I live it runs $100 a year to work your own plot of land. It may not be yours, but it will provide you with enough food and experience so that when the SHTF you have the expertise to start over again -which is more than I can say for many city-dwellers.

I'm like you; I dream of farming and reaping the fruits of my own labor, however I know that I cannot do it in the U.S. I've drastically cut down on my lifestyle where before I had cell phones, a gas guzzling modern vehicle, and ate prime rib often, but now it's mostly homemade organic soups, a modest older vehicle, no cell phone, no TV, basic internet, and storing my wealth in physical silver. I'm saving up enough to emigrate to ***** where I can easily buy a plot of land to farm and live out my life doing meaningful labor and raising a family. I don't mind hard work, in fact, I love it if it is meaningful.

A couple years ago I had a job where I cleaned dishes and chopped firewood in the snow for a log cabin restaurant in the mountains and I loved it. The pay was meager, but man the perks! Free food, the ability to drink on the job, and helping out an entrepreneur who really treated us well was great. Chopping firewood brings a certain "zen" where your mind has time to think and your body gets the exercise it needs. The work was hard, and the work was meaningul. When we closed we would sit together and have a beer and shoot the shit.

Fuck, I miss that job.

Thu, 01/16/2014 - 22:23 | Link to Comment Dr. Destructo
Dr. Destructo's picture

Double post.

Thu, 01/16/2014 - 17:31 | Link to Comment Vashta Nerada
Vashta Nerada's picture

I truly believe we have reached a point where the weight of government has become too great for the private sector to carry anymore.

Thu, 01/16/2014 - 17:37 | Link to Comment Oldwood
Oldwood's picture

If government was truly providing service and value for the money spent it would be much less of a problem, even if it represented socialism (which I'm most definitely against). The problem is corruption and the incredible waste and malinvestment it creates. It has become a metastatic like a cancer and as everyone is dependent upon what dredges this corruption affords us, we cannot kill it without killing whats left of our economy. We are trapped by a series of bad choices of which are only getting worse.

Thu, 01/16/2014 - 16:11 | Link to Comment q99x2
q99x2's picture

Keep the money flowing to the masses unless you want to lower the price of housing in the Hamptons.

Thu, 01/16/2014 - 16:12 | Link to Comment The worst trader
The worst trader's picture

Yep, as a small business owner It's imposible to expand, everytime you think it's getting better it's tax time or insuranse goes up or material costs. Lamest recovery ever. Been in business for 30 years................

Thu, 01/16/2014 - 17:27 | Link to Comment Spigot
Spigot's picture

Seek high margin, well protected sector. Jewelry historicly has been 600-1200% markup. You could be able to make due with 300-400%, no?

Thu, 01/16/2014 - 18:55 | Link to Comment smlbizman
smlbizman's picture

i got out.....'07 unemploymnt per man....59.00

                 'tshf ..unemplymnt .............700+

                   '09..drum roll...................1600+...

this was in md...we pay for rain now also.....

Thu, 01/16/2014 - 19:08 | Link to Comment Spigot
Spigot's picture

Yep. Government mandated bancrupcy. That is when going Galt is where the smart go. Find your holy ground and reside quietly, working diligently for your own sustainance.

Thu, 01/16/2014 - 16:18 | Link to Comment buzzsaw99
buzzsaw99's picture

can't imagine why people don't want to participate in the labor force and enjoy this great recovery we're having. lulz

Thu, 01/16/2014 - 16:22 | Link to Comment NihilistZero
NihilistZero's picture

It's not borrowing 26 Billion from China, we're borrowing from Aunt Yellen :-)  The funny thing is all these numbers they point out its fantasy.  Fantasy they usually use to justify shafting the lower class.  I don't support what the FED is doing, but saying that creating money and giving it to the lower classes to keep the economy greased is the worst thing ver is preposterous.  You could give twice that to the unemployed and minimum earners without creating a tick of inflation.  It would barely even dent the overcapacity plaguing our economy.  It would likely HELP us reach an economic equilibrium much quicker.  But we can't have the proles not take on debt now can we?  There in lies the rub, the FED has no interest in keeping the REAL economy greased, they merely want to keep the profits of the banks and the FIRE economy as high as possible.  Creating money that goes directly to consumers is not in and of itself a bad thing.

The Government should create, issue, and circulate all the currency and  credits needed to satisfy the spending power of the Government and the buying power of  consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity. - Abraham  Lincoln

Thu, 01/16/2014 - 16:50 | Link to Comment Stoploss
Stoploss's picture

Money will cease to be master and become the servant of humanity. - Abraham  Lincoln

Illiterate and stupid.. 

Here's my take on that.

Money has become the master of humanity. - Stoploss

Thu, 01/16/2014 - 16:23 | Link to Comment karzai_luver
karzai_luver's picture

These "e-CON-o-mysts" should keep their mouth shut - that way they could still profess to have a clue.

 

Maybe if we borrowed 26 billion or whatever from China and gave it to the biz-bs-owners ( o wait we already are) old dunk would be happy.

 

Choke on it clown.

 

Thu, 01/16/2014 - 16:25 | Link to Comment skank
skank's picture

Where's my barf bag?

Thu, 01/16/2014 - 16:29 | Link to Comment khakuda
khakuda's picture

My friends with small businesses are unanimous in their disgust.  Many have seen their personal heathcare insurance costs rise over 50%, are moving to temp workers and now not planning on hiring.  One with a laundromat says that after paying staff and his personal family heathcare, it no longer makes sense to run a business, as he is better off working for a larger company with benefits.  I watched him invest all his savings, borrow money and toil at his place daily.  He had to spend tons to meet local regulations requiring handicap accessible bathrooms, atms and machines, though they go unused.  Now as insurance, taxes and healthcare costs rise, he is being forced to reduce staff hours and do more himself.

Even people with poverty level income who have some assets like home equity or some savings are seeing their healthcare costs rise.

Thu, 01/16/2014 - 16:31 | Link to Comment buzzsaw99
buzzsaw99's picture

...members of the graduating class. I have only one thing to say to you today... it's a jungle out there. You gotta look out for number one. But don't step in number two. And so, to all you graduates... as you go out into the world my advice to you is... don't go! It's rough out there. Move back with your parents. Let them worry about it.

Thu, 01/16/2014 - 16:38 | Link to Comment delivered
delivered's picture

Love these articles on small businesses as this has been the primary market (i.e., $10 to $100 million in annual revenue) I've supported and served for the past 20 years and let me tell you what I'm seeing:

- First, the weak and struggling small businesses died a long time ago after the implossion in 2009. After attempting to hold on in 2010 and maybe 2011, they're gone.

- Second, the stronger businesses that survived have stablized their balance sheets and maybe just returned to pre-recession levels but let me tell you that all I have been focused on the past 2 years is assisting with selling these businesses to large companies. Valuations are high (from extra liquidity), demand is high (as larger companies need new sources of revenue to grow), supply of quality businesses is low (dogs/weak have folded, no new businesses were formed from 2008-2010, etc.), owners want out (in their sixties now, don't want to experience another meltdown, etc.), and deal structures are highly liquid (heavy cash components). 

- Third, regulatory environment is killing small businesses. Obamacare is part of the problem but state, regional, and local compliance matters (from added taxes to employee HR issues, etc.) are out of control. I operate in California which has reached a point of complete overkill and excessive mingling. HR issues are a nightmare as are insurance requirements, raising capital, and securing talent.

- Fourth, the brain drain for small businesses is accelerating. Aging owners in their sixties are exiting. Demographic of skilled workers shifting towards Baby Boomers that can't take risks in smaller businesses. Programs like Obamacare actually accelerate this as best health programs are with larger companies and smaller companies are left with poor programs or ACA. 

- Finally, trust in the markets and the twin evil W's at all time low. Nobody believes for a moment that Washington/Obama and Wall Street really give a shit about small businesses or have truly "fixed" the fundamental structural problems in the economy (think record federal debt levels, unthinkable CB balance sheet expansion, etc.). 

Very difficult to have a high level of confidence in this economy with these factors in play.

As for the effort to provide more "financing" this is complete and total bullshit. Access to financing and credit is a function of real growth, confidence, and business fundamentals (i.e., demand pull). Using a supply side strategy is a joke as this only provides sources of capital that nobody needs or will use. 

And one final comment on this subject. Basically, all small business lending has become nationalized through the SBA. I'm talking about loans from $50k to $500k which most banks simply use the SBA program to provide the loans. Bank originates the loan, earns the underwriting fees and then passes 90% of risk off to the government. 

What do these MoFo's not understand about the economy. They nationalized banking in the country (think # of banks act record lows with regulatory influence at record high), mortgage lending (through Freddie and Fannie), small business lending (through the SBA), privacy/security (NSA), are attempting to nationalize healtcare and will soon be in the student loan business as well. 

I ask the Zerohedge community, what part of your life or business isn't touched, influenced, and/or controlled by the government? 

Thu, 01/16/2014 - 17:11 | Link to Comment Meat Hammer
Meat Hammer's picture

My tomato plants.  Actually those probably are, too.

Thu, 01/16/2014 - 17:50 | Link to Comment Spigot
Spigot's picture

Excellent and practical information. Thank you for sharing. I wish I was big enough to be a buy out opportunity, but will get there eventually. I can not afford: employees, loans, higher costs or lower margins. I am positioned in my business such that I am growing rapidly in this environment, and am profitable enough to continue to grow regional placement and market share. I started the business knowing full well the pending "troubles" and have a business and operational plan which assume the worst on all fronts.

Any "commodity" business is doomed. High end, high margin businesses will thrive and grow. And what you have MUST MUST MUST be unique, upscale and unrivaled for quality. Otherwise, save yourself the toil and risk.

Thu, 01/16/2014 - 18:14 | Link to Comment delivered
delivered's picture

Spigot,

Thanks for the comment and wanted to pass along some additional thoughts to consider:

- I've advised all of my accounts/clients that are in a position to sell to get out by 2013 through mid/3rd Qtr 2014. This is now the window for an exit in this cycle based on my previous comments (and below). BTW, you would be amazed at how small you can be to structure an effective buyout as if a real growth/opportunity story is present, targets will take notice.

- The businesses I supported through the entire acquisiton process fell into your assessment. That is, high quality, space dominant, growing niche businesses, with strong management teams and solid margins. The acquiring parties basically "had" to buy these companies. BTW, the acquisitions covered all spectrums including tech manufacturing, speciality manufacturing, WiFi, rapid prototyping/service, professional services, etc. and all were able to demand premiums as the deals were structured from a "strategic" standpoint and not a financial standpoint (i.e., backed by PE money).

- Use to be that most businesses needed to complete three forecast scenarios - high, medium, and low. Now a fourth is needed. ARM which stands for Armageddon. Every company needs a dissaster plan in this economy.

- Why get out now, well on top of the reasons I noted previously, this cycle fact should be seriously considered. In 2000, the cracks were appearing throughout the economy so by 2001 (Nasdaq implossion), the meltdowns occured which of course was amplified by 9/11. Recession then took hold from 2002 through 2003. In 2007, the cracks were appearing throughout the economy so by 2008, the meltdowns occured (BS and LB failures). Great Recession then took hold from 2009 through 2010. Seven year cycle, sound familiar? Look for the cracks in 2014 but remember to look where others don't.

That's the secret so some of the items I'm focused on are a.) excessive use of debt to fund acquisitions with weak terms (i.e., stupid deals), b.) action in precious metal markets (not price but GOFO rates, registered available levels for delivery, price volitility), c.) failure of Obamacare (but will not be made public until after mid-term elections in late 2014), d.) pressure on consumers (i.e., real disposal income levels decreasing, loan deliquent rates for auto/student increasing), etc. Or in other words, look for STUPID money to start flowing as that will be the sign that the implossion is soon at hand.

Appreciate your feedback and input and I always enjoy having the opportunity to assist small businesses which I've done directly through my consulting firm and indirectly through having the opportunity to write four different hands-on & practical accounting/financail related books.

Best of luck.

Thu, 01/16/2014 - 21:05 | Link to Comment Spigot
Spigot's picture

Thank you for your response. Please pm me at e3uqlpw1a@lhc06qkt1a.net (yes, that is a real email addie). I'm always building my network of connections for future endeavors.

My short and mid term 3 sigma scenario is this:

1) ZeroCare is the straw breaking the camel's back. Resultant effects on consumer spending will be very much like gasoline going to $8-$12 per gallon.

2) China finally starts to break down, and this flows out into the larger global financial system, which then begins to swirl around the drain in ernest.

3) Due to "unforeseen circumstances" confidence in the FMLFS (Financial Multi Level Fraud System) which has enable piling sand like a pillar to the moon, begins to fail, resulting in rising interest rates which can not be controlled by the wizards of global finance.

4) expected effects from rising interest rates and failing CB influences ... they lose control, and everyone knows it.

5) social "instabilities"

6) Obama waves his 'majik wand' and prancing unicorns come dancing out of the wings shitting rainbow skittles everywhere, making the world a new and more beautiful place ....

Just kidding about #6, you can fill in the blanks after that.

Thu, 01/16/2014 - 16:55 | Link to Comment SheepDog-One
SheepDog-One's picture

A megalomaniacal dictatorship has no time to listen to the serfs!

Thu, 01/16/2014 - 16:58 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

You would think if Democrats and Republicans really gave a fuck about you and me and the economy they would at least do the following concerning Obamacare; limit the 30 hour part time worker designation and stop penalizing businesses by setting employee limit quotas due to the fine structure. That more than anything else will provide a quick stimulation to hiring and bringing people back into the labor force.

You know why they don't do it because the businesses want Obamacare at least until they can jettison enough of the healthcare costs they currently take on in expenses and get people used to idea that businesses don't need to provide insurance as part of a job's benefits package.

If they really gave a fuck both sides of the aisle could get that much done NOW regardless of all the other fucked issues with Obamacare even if repealing it won't happen in the short term. They don't give a fuck or else they would do this.

Just remember this you never hear the right and things like Fox news telling you and businesses how they CAN opt out of Obamacare and what the options are or pushing to have the burdens on all businesses concerning fines and hours that create employee quota caps to be removed from the law.

Thu, 01/16/2014 - 17:13 | Link to Comment Meat Hammer
Meat Hammer's picture

Dewey, if they gave a fuck about us they'd quit.

Thu, 01/16/2014 - 17:23 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

True but they need to be called out so we can watch them squirm and hang themselves in the eye of the public with their responses. None of the supposed right side of the 2 headed hydra good cop/bad cop routine that is MSM mouthpieces for the REP/DEM parties are doing it which only leads me to one conclusion if they are supposed to be not the same team....

Thu, 01/16/2014 - 19:28 | Link to Comment LooseLee
LooseLee's picture

Of course, none of the RUS2000 companies (up 30%+ in 2013) are saying this. They are pegged for 15-20% growth in revenue in 2014 based on the stock prices....At least that is what the BULLTARDS who are buying these stawks MUST be convinced of----else they are MORONS...

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