Corpcentre's Blog

April 28, 2010

Business Plan: Change As Needed

A business plan is a vital management tool. It allows you to create a road map of your business and look ahead while, at the same time, plot the necessary steps to achieve your goals. However, paraphrasing the poet Robert Burns, the best laid plans of mice and men often go askew. How true in business.

The world has learned much from the recent recession. One of the more important business lessons that the recession has taught us is that nothing is guaranteed. How many of us watched as financial giants, titans of the business world, tumbled like a house of cards? Who would have envisioned the swift changes that changed the way we live, not over a generation but over the course of a year or two?

Change is the key. The businesses that best survived the recession were those that understood the necessity of change. A business plan is not set in stone. Rather, as a useful management tool, it should not be allowed to gather dust. Just the opposite. It should be, and can be, changed. Business, like life itself, is a rollercoaster. Even if some of the ride is scary, you can’t get off in the middle. You need to be flexible and allow yourself to adapt to new situations.

If you see a new business opportunity, change your business plan to incorporate it. Allow yourself the flexibility to explore new options. Don’t be afraid to try new ideas. Sometimes, even bad situations can create new opportunities. If your plan went awry when the markets went in a different direction, turn everything around to incorporate the new reality. You may wake up one day and realize that your goals are no longer attainable. Don’t try to change the world to meet your goals. Change your goals to accommodate the world. The most successful entrepreneurs have learned that opportunities present themselves and the winners are those who seize those opportunities. Always use the situation at hand to your best advantage.

Try business plan software to help you get organized!

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March 8, 2010

Should Politicians be Deciding our Fiscal Policies?

It seems that the hurricane called the global recession is starting to lose steam and peter out. But, if you follow global weather patterns, you see that there are always after effects, residual shocks, smaller storms, etc. In short, no disaster seems to operate independently. There is always cause and effect.

So what caused this recession? After all, if you can isolate the cause of a disease, you can help prevent its recurrence. The near collapse of the US economy was frightening. The devastation caused by it harmed countless individuals and businesses alike. Many have not yet recovered. Who is to blame?

It’s easy to say that the mega-bonuses within the nation’s financial industry were the problem. However inappropriate these bonuses may have been (and continue to be), they were not, and are not, the root of evil. No, when all is said and done, the root of economic evil is lousy government policy. Government leaders, and their script writers, are excellent at describing the ill-gotten gains of the private sector. It is quite easy to divert public attention from the real problems at hand by placing blame at the markets whose goal is to earn money. How many millions of American homes are now in foreclosure due to a mortgage system that was manipulated by US government policy, rather than operated by the modes of free economy?

Imagine, for a moment, that the US government operated along the lines of a major for-profit corporation. The Senate and Congress would be the Boards of Directors and/or shareholders. The CEO and his staff would have to justify their fiscal policies and operate the business in such a way to please the directors and shareholders. After all, the bottom line is what truly matters. Sounds absurd, of course. On the other hand, can one imagine a mega-corporation continuing to function while juggling an operating debt of more than $1 trillion? Of course not. At the minimum, some change in fiscal policy may be deemed necessary.

But, governments continue to operate based on political need. Business will adjust to the times and weather storms as necessary. With a little luck and hard work from non-government entities, society will persevere economically and overcome the mistakes of its political leaders. If we want to avoid another recession, it’s truly time that politicians stick to their business but leave the money matters to the professionals.

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March 5, 2010

Normalizing Interest Rates?

With the end of the global recession now becoming more than merely a prediction, the time has come to begin the clean-up from the temporary measures that were a necessary part of the economy during the difficult financial times. In short, besides stimulus funds becoming part of the scenery, record low interest rates were also an everyday occurrence.

Interest rates, at near zero levels, were the Shangri-la of investors. Investors who could tap this virtually free money, profited well and the markets responded in kind. In a chain of events, this unprecedented boost of the markets helped restore confidence in the average household and greatly strengthened the ailing economy by fortifying its foundations. However, even the best of vacations must come to an end. Any student of economics will tell you that interest rates reflect and influence an economic situation. Artificially set rates will cause undue influence and possible damage. The current rates were set for an emergency situation. With the economic emergency now having been downgraded, the time has come to allow the markets to respond appropriately. The question now is the timing and magnitude of the normalization of rates. Having faced a near collapse of the financial sector in the Western world, it is crucial that the central banks of both the US and Canada time their adjustments accordingly. For example, towards the end of the Great Depression in the 30’s, the US government pulled out its stimulus funds in a final push in 1937-38. This sudden move, due to improper timing, had a negative effect, pushing the US economy into a tailspin and sent the markets reeling.

Economists are mixed in their predictions as to the end of the rock-bottom interest rates. Most feel confident that neither the Governor of the Bank of Canada nor the U.S. Federal Chairman will allow a repeat of the Great Depression mistakes. However, even the latest of predictions for rate hikes is no later than early 2011. Some predict that rates will begin rising by this summer. In either case, investors should prepare themselves for a return to normalcy. The worst, we hope, is over.

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