As a business strategy, cash is king right now. A bold statement or a foolhardy one – you decide.
Typically during an economic shock such as right now, many businesses are reeling from the shock of shrinking cash resources such as credit, retail sales, bank financing, bank financing, supplier financing, and the list goes on and on. But most people will simply complain that all of the above really makes cash an even rarer commodity. Precisely my point. But think carefully what happens when a situation like SBA (Small Business Loans) Loans starts to dry up and entrepreneurs are looking for that all important financing.
Then, there are other huge reasons why some companies actually flourish while others falter badly, even when the economy turns for the better.
1) Opportunities abound to get newer businesses to the next stage of growth. When you find promising businesses looking for cash, where do you think you might be several years from now? And with several such ventures under your belt, you really only need one big play to make it big. After all, those who venture out and invest in their businesses with an expansionist attitude like buying into a related company or venture often do well.
2) Advertising; attacking a new direction of the marketing budget. The smart ones start to use their advertising and promotional cash more wisely. Today, they are using electronic advertising and building their online real estate. This is just cash wise.
Unfortunately, many companies simply continue to use the same outmoded versions of paper advertising. There are several reasons why these more often than not fail. The main reason is of course costs. Imagine needing to repeat your sales pitch a dozen times over just to get your potential customer to buy. All the while, your flyers are filling up the recycle bins.
If you realize what an opportunity this is for your real net worth to rise, why don’t you take a good look at what you are really worth and gather the cash to build your future growth? Of course you can always find the fastest way for a business to make more money despite the competition, you’ll need a good business strategy.
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Westfield Shopping Centre - London
This year, do an about face and save money. Get your bargains in the big cities anywhere in the world and you’ll see one very prominent word: “SALES”.
Like it or not, the Christmas season is upon the world. This is a most critical time of many retailers’ year. They will either make it or go into the red big time. Therefore, they have to move stock. But with the threat of the recession looming in some parts of the world, and in most western countries, it has already hit – and hard, deep and extended discounts are the norm.
Shoppers have become exceedingly cautious and picky – it’s “Give me a deep discount or I’ll go to the next store”. Cash is king at this time.
So, if you want some really good bargains – that jacket, those shoes, that suit or perhaps that new computer, travel downtown or to the next big city.
All across the globe, from New York, Toronto, Los Angeles, London, Shanghai, Hong Kong, Singapore, Sydney, etc. you’ll get the coveted discounts.
Do your world tour – and you’ll be pleasantly surprised at the much lower prices than last year. Your dollar or pound sterling – your money goes a lot further than it used to. In fact, I was surprised by the sheer number of shoppers anywhere. The planes are basically full – travellers are very definitely getting their moneys worth.
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Cash is King again in this economy. Why?
When you have it, you can be the final arbiter during a buyers market.
There seems to be a shortage of that commodity everyone now craves for. There doesn’t seem to be enough going around.
So what’s the real problem then?
The distribution of that cash is a lopsided affair. Most of it is being held in larger amounts – i.e. the wealthy keep their loot pretty close to their chest or rather their war chest. That means this is cash invested in safe interest bearing financial safety and not meant to be spent any time soon.
There Has Been More Cash Stashed Away Than Ever Before.
Economic performance is really a measure of spending and all that cash are not in the hands of the spenders. That’s most of the people who would ordinarily spend to make their lives a little easier. For example, a new home, a sofa, that latte, the subway, a cab, a quick trip down town, shopping at Macy’s or Wal Mart… In other words, the everyday consumers who make the economy go round.
The truth is, there has been more cash stashed away in the last decade than ever before. The global economy had been expanding significantly the last 15 years. So, then where is the cash?
According to a Forbes report, cash deposits have risen significantly:
“American households have $7.4 trillion in checking, savings and other bank accounts and money market funds. They have another $4.1 trillion stashed in Treasurys and other bonds. That $11.5 trillion, up from $8.9 trillion (in constant dollars) in 2000.”
Despite the mortgage melt down, that’s more than enough to pay off every home mortgage and also enough to bail out the American economy.
As an investor, the general assumption is that you always have to be invested; holding cash suggests that you’re not investing but rather sitting idle. Yet this assumption couldn’t be more misguided. Cash is actually the investor’s most valuable asset. Most don’t see its true value, however, until there’s a cash crunch in the economy.
It’s the buyers market and with cash in hand, you can call the shots. My price or I’ll leave it. Warren Buffett beat out other buyers for Constellation Energy because he didn’t have to quibble about financing.
But you need more cash and you need it now. So does most of the other folks around you. It’s just a lot harder now. A borrowing life line from the bank just ran out, and you’re told lay offs are imminent.
This is when due diligence is required. You will have to make a full financial picture of your entire assets versus liabilities and your cash flow. You’ll find places like that smoke or snack and latte or that eating out weekly that can be cut; reduced travel with the car or SUV; that new pair of jeans can wait another year…In short, you’ll find money you didn’t have.
The above ideas are conventional enough, but this is the part where I often get howls of protest like wolves in the full moon.
Finding spending cut backs is one thing. Now, how do you replace your income? Do you get another job and let the whole cycle begin again? Remember the above narration about having money? Notice it belongs to the rich who can hoard it until an incredible investment comes along. If you’d like to be there, you’ll have to do your homework and begin to really learn to invest to make your money work for you.
Piggy Banks To Save Some Money In Is Actually A Darn Good Idea.
All most rich people will tell you is that during times of poor economic performance, it your performance that will win the day. If you succumb and hold onto your remaining assets or cash and do nothing for the future, you’re dooming your future.
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