Master of Disaster

One of the reasons I chose to go into disaster restoration was that the business was essentially actuarial in nature.  If you walk into any insurance company's office, they can tell you, with some precision, how many claims they'll be paying out in the next year.  There are always disasters happening to people's homes. 

Granted, the slow economy has hurt us in ways that may not be obvious.  For instance, if you have unemployed friends and relatives with construction skills, you might choose to have them restore your home, instead of a professional restoration company, like mine.

Still, overall, some percentage of people will need help.  I figured no matter what, there'd probably always be some business for me to do.

Trouble is, the business doesn't come in a nice, steady stream.  Sometimes we're so busy we are literally having difficulty keeping up.  If you walk into our office that day with an impressive resume, we might literally hire you on the spot. 

Other times, things are dead slow.  We have been that way for the past 3 weeks.  Dead slow, as in plans to cut everybody's hours were closerthanthis to being implemented and the next step was to lay off as much as 1/3 of my workforce.

Still, I held on because I knew, eventually, we'd be busy again.  There's just no way to know when. 

We've grown quickly in my company.  That has presented its own set of problems.  We've had to borrow money to buy equipment so our capacity was able to meet customer demand.  We have never really had an excess of cash in the business.  We have had to spend a lot of money to train and equip everybody.  In the past year, alone, I've bought 3 vehicles for the company.  (Last year, we had 6.  One of them basically died.  Now, we have 8.)

So, when slow times come, there's not some huge cushion of cash we can draw on.  Small business is its own universe.  One of the ways it is unique is that in most cases, the owner is the only financial "backstop" there is.  Once I run out of money, the business runs out of money.  We then become insolvent and perhaps bankrupt. 

During my first year of business, I sold over $10,000 worth of musical instruments and recording equipment because of a business slowdown.  Fortunately for me, that was able to tide me over for two months until things could pick up a little bit.

These days, with as many people as I employ, and as much overhead as we carry, it would be nothing for me to burn through six-figures in just a couple of months.  Suffice to say, that's an amount of money that can ruin most people, and in this case, I'm no different than "most people". 

I enjoy being in business for myself, but it is always obvious that my financial well-being is in-play.  Every day the doors are open, I take a risk.  To me, it's not just a risk to me, but also to my family.  A lot of people get hurt if this thing craters, and some of them I'll be seeing regularly for the rest of my life.

That's one reason why I cringe when politicians make attacks against high wage-earners.  Many of these so-called "wealthy" are small business owners just like me.

It's important to note that my total compensation as a small business owner should really be considered two separate components.  I get paid for my labor:  basically the things I do to run this place.  I also get paid for my investment:  I need an economic rate of return in order to keep my money in the business.

Without that economic rate of return, I have no incentive to risk my money.  I'd either sell the business, or sell off the assets and sit on my money collecting a risk-free rate of return.  Every day I leave my money in my business, basically my entire net worth is tied up in a single, undiversified investment. 

Granted, the "undiversified investment" is a business that I, personally, run, but I'm not going to put so much of my net-worth into an endeavor if there isn't a good prospect of an economic return on my money.

I am very happy being a capitalist.  It has benefitted me, personally, but it has also benefitted the dozen people who I employ.  It benefits our community and our country with the taxes we pay.  Our customers benefit from quality services.

So, it pains me to no end to hear the efforts of entrepreneurs described in terms of "greed" and the need to punish us with increase taxes.  Accept it or not, I don't see that I'm doing anything wrong.  To the contrary, I believe I'm doing a whole lot of good.

In any event, the past 3 weeks were the worst we've had in about a year and a half, near as I can figure.  The tide appears to have turned, though.  This is our slow time of year.  Things are touch and go until about December, sometimes as early as November.  That's when the real cold weather comes and all heck breaks loose.

We jumped the track and it will take 3 solid months for us to finish the year at over a million dollars.  Still, worst-case and we'll have increased sales by about 10% this year.  In an economy like this when so many others are struggling, that's not half bad.  It's not out of the question to hit a million... we'd just have to have some serious good fortune for the rest of the year.

We never did have to lay anybody off these past few weeks.  I paid a lot of folks to do some tasks that came dangerously close to busy-work, but never even so much as asked an employee to clock out early.  We've never laid anybody off since I opened the doors.  That is a streak I hope I can maintain.

Times like these, it pays to stay positive.  It's already the middle of September, and this year's busy season is right around the corner.

Some Perspective on the Economy, by the Numbers...

I really do hate the current economic climate. No doubt, it's causing pain for a lot of us. For some, it's been an absolute disaster. Even those who have been relatively unscathed are afraid for their financial well-being like never before.

It's tempting, at a time like this, to want to throw the baby out with the bath water, declare that the United States is broken, and that we need to change everything from the ground up.

Unfortunately, the numbers don't bear that out. Don't get me wrong: we really do need to do some tinkering with the model, especially in regards to banking, insurance and health care reform.

Underneath it all, though, the greatness of America is still evident. So, let's not be too eager to tear down the things that could continue to keep us great through the 21st century and beyond.

Let's not lose track of the fact that China may have an astounding growth rate, but that in absolute terms, the US economy has grown more in the 21st century than the Chinese economy has grown in the last 3,000 years.

Literally, we created an entirely new economy, the size of China's entire economy, in less than 10 years right here in the US.

By this I mean, that the entire Chinese GDP is roughly 5 or 6 trillion dollars. (Depending on a lot of factors, and how you measure GDP and against what standard.)

Our economy has grown by about 5 or 6 trillion dollars since the turn of the century.

Literally, it took 3,000 years for the Chinese to grow as much as we've grown in the past 8 or 9 years.

Yes, their growth RATE is impressive, but the reality is that it's only impressive because their economy is transitioning from a medieval agrarian soceity to a modern industrial one. They're literally transitioning from beating the ground with sticks to stealing US intellectual property to build with CNC machines.

In the mean time, they have an abysmal record on human rights, and if not for the fact that they steal all the intellectual property they lay their eyes on, they wouldn't have an economy at all.

The US definition of "poverty" is such that, frankly, only a statistically insignificant number of Chinese people are not living in abject poverty by US standards.

Don't envy them. They can't enjoy double-digit growth rates forever. Once they're industrialized, they'll be subject to the same laws of economics that we are.

We had double-digit growth rates, too, when we transitioned to an industrially based economy, 100 years ago. Difference is, we pioneered that technology. China hasn't pioneered anything in a thousand years.

I wouldn't advise you to put too much of your betting money on China to dominate the US anytime soon. They have to prove they can do something other than steal US innovation and produce it with sweatshop labor ignoring all environmental impacts before I'll consider them a threat to the US.

Our unemployment rate is approaching 10%. Some of you who have travelled to Europe know what I'm going to say next. At our worst... as in "worst since the 1930s", our unemployment rate is basically approaching European unemployment during the best of all possible conditions.

France always has an unemployment rate of about 9.5%. Always. Germany and the UK do a little better with historical unemployment rates of about 7%. The US? Those types of unemployment rates are scandalous and indicative of an economy that's badly off-track.

Those, by the way, are comparisons against pretty much the best and brightest the world has to offer.

So, before we declare that the era of US exceptionalism is over, let's take a deep breath and remember that by almost all measures, the US is still an economic engine that's the envy of the world.

If we can avoid changing things too much, we can lead the world out of this recession and beyond.