April 4, 2008

Editorial:

Economical survival in tough times

So, how is your day going? If it is anything like ours, your day is filled with uncertainty and apprehension. Every night we go home thankful we still have our job, and if you are a small business owner, grateful that you have managed to stay in business another day but unsure if you will be able to say the same next week or next month.

Every morning we wake up, hoping to hear a bit of good news, something/anything that will give us hope that the economy has hit bottom and finally will start to work its way back up. More often than not, though, the news is usually bad. Stocks are down, prices are up, and more people than ever are out of work. You don’t even have to read a newspaper or watch the evening news to hear the bad news. Just walking on the streets and you will overhear a phone conversation as someone proclaims that a friend is about to lose their home.

The only bit of good news out there is that next month the federal government is going to start sending out checks to everybody who filed a tax return. Friends and neighbors are already talking about what they are going to do with this windfall. The President is hoping that you will take the money and spend it on something other than back bills. The President would like to see you go to a restaurant, Home Depot, or take in a ballgame, put the money back into circulation, stimulate the economy!

The question is, what then, after you spend your $1200 for married couples who earned less than $150,000 plus $300 for each dependent child? For most of us it is then back to reality, struggling to get by.

For the small business owner this recession hits you particularly hard. Small businesses have very little margin to work with. Most small businesses bridge the income gap, when cash flow is not exactly flowing, with personal credit lines and credit cards, neither of which is substantial and the credit charges are high. Federal interest rate cuts have little impact on the small businessman.

The economic spiral downward impacted the small business community early in ’07 and most companies have been adjusting on the fly, cutting expenses wherever possible, trying to keep employees on salary as long as possible. But eventually there comes a time, after cutting back hours, that you have to start letting employees go. For most small business owners this is the hardest thing to do, you know each employee so well, often times they have become your friend.

If you are good enough and/or lucky enough, the expenses and income begin to balance out and you pray you can hang in there until the economy turns around. For most there is not much credit left and it wouldn’t take much to put us out of business. If you are not able to stop the hemorrhaging of red ink, then you are out of business and have to deal with fact that you have to pay back all that money you borrowed trying to survive. There will be no government bailout like we see with Bear Stearns.

The bailout of Bear Stearns, which found itself in big trouble due to their bad business decisions, to the tune of $30 billion is hard to take when you consider a few years ago when small businesses were hit particularly hard by the gas and electric deregulation and the spike in utilities drove many businesses to the edge of bankruptcy. The State of California sought out the President’s help in dealing with the crises and basically the President told us that it was an open market and we would have deal with the crises on our own. In the meantime energy companies made record profits while Californians suffered and many small businesses struggled or went out of business.

We are venting. La Prensa San Diego is a small business and we are a part of a larger cadre of Hispanic business owners who are in same boat. We are struggling, but surviving. So when you do get that extra cash from the government and after you pay those back bills use your spare money to stimulate the Hispanic economy. Instead of going to El Torito, go to a neighborhood restaurant. Choose a local business over a Home Depot. Shop at a local shop and support your community. Stimulate your local Hispanic businessman; you could save the job of a friend or neighbor!

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