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The Future

Like many, I have been pondering what the economic future may look like and my outlook has been less than rosy. I look at the consequences of leaving hundreds of thousands of small businesses shuttered for three months and think there is no way out. While the stock market continues to be buoyed by some sense of hopefulness, the small business world that I know isn’t traded on any exchanges. To ease my fears, I turned to an old and trusted business colleague, mentor and friend, Rob Slee. Rob has Chicago M. B. A. but really and has written the only book I’m aware of that examines the capital markets for private businesses, “Private Capital Markets”. It is a phenomenal resource for us small business geeks.

Rob and I spoke last week for close to an hour. I wish I could say that he talked me off the ledge, but we were so similar in our outlook and forecast that it was a bit eerie. Currently the U. S. stock markets are valued at four times the Gross domestic Product (GDP). The economy is healthy when GDP is 1.5 to 2 times. This according to Rob. Also, as noted, the small business sector tends to use business to create personal lifestyle instead of enterprise value. While that may work in good economic times, and even through a mild downturn, the businesses will not be sustainable when there is economic upheaval as we’re facing now. Small businesses make up 50% of GDP. When they hurt, the country hurts.

Follow one small sector, the restaurant industry, a business sector I grew up with. Certainly, large chains may survive but not all of them. But take a family owned, neighborhood restaurant and close it for a few months and there is bound to be disaster. No income. No way to pay rent or mortgage. Further, the supply chain suffers. Meat, grocery, dairy and produce purveyors. Equipment manufacturers and linen suppliers, all effected like a game of dominoes. This ripples through the economy and happens in every city across the county.

I’m normally optimistic about the future. But not now. I’m worried. I don’t think the government printing money and mailing checks solves the problem. Maybe it’s just me. But hold on for a tough few years.


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