Forums: Discussions for entrepreneurs and small business.

Like a lot of people, I`m interested in the overall context of today`s collapsing economy. It`s okay to wonder about it all, but the real use is to see what kind of trend analysis and predictions we can generate. One prediction is that I think we`ll go through at least a decade of reverse events from what we`ve seen in the 80s and 90s.

Think about the great mergers and acquisitions rage of the 80s. Companies couldn`t figure out how to make money through products, so they bought up other companies to add those profits to the master bottom line.

The result has been fewer and fewer mega-corporations controlling hundreds of subsidiary divisions. It`s like a pyramid.

The major problem with this strategy is that companies have lost touch with their core business. Food companies now own airlines, theaters, electronics companies, and so forth. Accountants run the world!

I think what we`re about to see is a massive divestiture---a great splitting up of thousands of companies. Think about the automotive industry. One major company like GM bought out all the other, minor brand names.

Another example is buying a CD drive for a computer. There may be a number of different company names on them, but they`re ALL made by only one or two corporations.

Suppose you want to own a car company. Right now you probably can`t because it costs so much to enter the field. But what if GM begins selling off entire subsidiaries? What if they simply sell "Buick" as a whole separate company? It`d sure be cheaper to buy just that old brand than to start a car company from scratch.

All this comes down to a fundamental principle I`ve been seeing. There`s a total difference between selling a real product or real service, versus pretending you`re making money by cutting costs and boosting the operational bottom line. Selling a candy bar is entirely different from cutting the costs of making that candy, then claiming you`re "earning" money.

The result will be that instead of 1 company owning 5,000 movie theaters, I think we`ll start to see a break-up. As those publicly-held major companies start to go broke, they`ll continue with their "operational profits" strategy. They`ll start getting rid of the individual theaters that aren`t "making money."

That means 1 person can buy 1 theater in 1 town.

A lot of this comes down to another question. How much money do you want to earn each year?

If you`re a corporation, there`s no answer other than "more than last year." But if you`re passionate about movies and only want to own your own theater, then you likely could be happy with say, $80,000 per year.

I believe that this move toward break-ups, divestitures, and fragmentation is going to do two things. First, it`ll fuel the fire of "buy local," an emerging battle cry of exhausted consumers.

Secondly, it`ll re-focus the business world on quality, creativity, personalization, and unusual products. We`ll start to see the end of the mass-produced junk we`ve been living with for the past 25 years.

And that means lots of opportunities! The niche market business owner will begin to thrive again. Art, crafts, hand-made products; those too should thrive. With Internet distribution, a mom-n-pop store can sell to the whole world.

Now, with big companies about to get rid of pieces as those big companies start to collapse under their own bloated weight, I think it`ll open the door for even more diversification of goods and services.

Y`think?

I think divestiture (fragmentation) would be the natural avenue that these conglomerates would have to take in order to survive.at some point the parts are worth more than the whole.
the caveat is the government, it doesn`t appear they are willing to let natural selection of the fittest happen.
my question is how long will they try and how much will they spend to delay the implosion? When the implosion happens, and it has to happen throwing money at this problem without changing the way they do things insures failure, (if you want to change results change your actions), will the common guy still be there (kind of like king Kong and Godzilla tearing up Tokyo when it is over all the small guys have been eaten or crippled)?
I am sure this is going to be one of  histories biggest "could have, should have" reflections.

just my thought

I`m excited.  I`m all for it.  Even though I do marketing now and

smaller, leaner businesses that focus on a single core competency is the key going forward.  greed kills (let`s def make the distinction between greed and ambition however having said that)

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I think that we`ll see a dramatic addiction to "the old ways" and old solutions before we see changes. To that end, looking across history, I`ll suggest that America will face a semi-socialistic economy for long enough that EVERYbody will be impacted.

The model would likely be East Germany during the days of the Soviet Union. Bureaucracy will be an entire class, along with the political class. So we`ll have "the people" on one side, and the bureaucrats and government officials in an adversarial position.

Regulations, paperwork, forms, and rules will dominate everyone`s life constantly. I`d expect lines, shortages, rationing, and even price controls, all of which were tried repeatedly in socialist and communist countries. All of which totally and absolutely failed.

But here in the US, we`ve never experienced the realities of a government-controlled economy. As such, it still seems romantic and workable, particularly to intellectuals, academics, and theorists, none of whom have ever held an actual job.

When we have enough pain, and enough companies have been driven to failure, that`s when natural selection will take effect. Did you know that "natural selection" was a term developed by an economist, back in the early 1800s, and NOT by Charles Darwin?

It`s funny, but today at an appointment, I was in the waiting room reading the Jan 19 issue of Business Week. Lo and behold, the discussion was about how few banks want to lend money on a Ch 11/13/7 restructuring anymore. The result is that they predict that an increasing number of companies will simply close their doors.

Along with corporate bankruptcies, we`ll see assets being snapped up at bargain-basement prices. Those "assets" mean subsidiaries and secondary lines of business. Hah! I should put in a for a government psychic license! LOL!

The next major problem is going to be the existing massive restrictions on microbusinesses---so-called home businesses. Back when corporations ran everything, lots of people liked the idea of taxing and licensing and regulating those freelancers.

Just wait until unemployment hits 15% and all those corporate employees suddenly try to run a business from home! I wonder how quickly we`ll see a "re-evaluation" of the many city, state and federal restrictions on home-based businesses!

Well developed predictions, I`m still reserving my own.  The possibility for an impending collapse is potentially more detrimental than an actual collapse.  People aren`t spending because they`re worried about the future.  Reassurance of a bright future for our global economy needs to be based on a powerful dream that inspires us all.


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We`ve had several decades of people trying to provide inspiration, encouragement, ideas, and especially productivity (invention, creativity, self-determination, etc.). The problem has been an ongoing contradiction to those efforts by both the government, looking for never-ending revenue, and the news media.

One of the factors I`m using in my predictions is that we`ve reached a point in history where most of the population doesn`t think about a period of time longer than about 2 months. We`ve lost our sense of history, in other words.

There`s a popular cliché having to do with "thinking positive." It`s used all the time, whenever there`s a problem.

However; when every solution to a problem is shut down, and all ideas are rejected, there must come a time when no amount of thinking about anything is going to change the inevitable conclusion.

The economy we face today is the result of nearly 100 years of almost a never-ending "attack" on capitalism and reduced government influence in that economy. The conservative movement has been a 50-year attempt to persuade the population to move away from this inclination toward restriction and regulation.

It`s now too late for "positive thinking." Before that can have an impact, we have to actually deal with the real-world consequences of having either approved socialistic thinking, or ignored the century-long trends.

In other words, if you spend more than you earn for 10 years then lose your job, you have a very large debt. That debt isn`t going to vanish by "suddenly" thinking positively. New, creative efforts will only function after the consequences of the debt have worked their way through the system and that system has returned to zero. There always comes a time in life when we have to pay the bill.

This may go a little too far.
I`ve read that when the Aztecs came across a Mayan community as they were exploring south America they found the former residents running wild and partially naked in the forests, and the compound vacant, they had returned to their beginnings. the Aztecs actually took over the city without any opposition.
I have visited some old Mayan compounds in south America, and witnessed the engineering and structure of the village, they could actually x ray a broken bone with just a cave, sunshine, a near perfect hole in the cave rock and a dish of water. the point is this civilization appeared intelligent and on the leading edge of the curve, they solved mysteries we are still trying to.
what if economic disaster lead to the fall of the Mayans, after all by all account religion was involved? I`m not talking about the dollar fell in value, I suppose it was more of a barter system, yet debt surely was involved for some to leverage themselves higher in the order, the bloodline is still alive today yet the civilization as it was is gone.
imagine for a moment that economic collapse lead to the fall of the civilization, so they stopped with the calender. then consider all the doomsday hype of Dec 21 2012 being the end of their calender and our lifestyle as we know it. could we be at the beginning of the end of our civilization? certainly it is going to change the way everyone thinks. I think the depression of the 30`s was mild compared to what is coming, and yet there aren`t a bunch of people jumping out of windows, what does that say about todays accountability.
get a 45 billion handout, buy a 50 million dollar luxury plane for a couple "super important guys" and justify it by saving the 2 million cancellation fee.
maybe these guys that have been planning for Armageddon aren`t that far off?
just a thought

Being interested in history, as well as familiar with the 2012 worries, I have to say I don`t buy it. It`s true that when a world-wide catastrophe takes place, we can`t predict the outcome. We may get through it, or we may not, there aren`t any guarantees.

However, I think there are a lot of "signals," if you will, that we`re about to enter into a major adjustment on a planetary scale. From my own perspective, it`s a philosophic reconciliation between two deadly pathways that began 300 years ago.

I suspect there`ll be wars, explosives, and lots of dead people. But I don`t think it`s the "end of civilization as we know it." Instead, I think we`re leading up to a true global community, with a global economy that actually can work.

The problem is that to get from here to there requires fundamental shifts in human nature, and a different view of existence than is allowed for in "science" as it was generated in the Age of Reason.

Think about what happened with the introduction of the printing press, the steam engine, electricity, and nuclear energy. Before they could stabilize, the whole world had to go through a major upheaval.

Same thing now; people have accepted debt-financing for 100 years, and we`ve all accepted science as the answer to everything for 200 years. Neither is the end-all answer, but nobody`s willing to be the first one to quit. So reality will demonstrate that these two systems aren`t the only way to live.

In the mean time, at issue is useful and practical predictions for the next 10 years. That`s where this fragmentation will lead to a tidal wave of self-employed home business owners. And that offers up a whole lot of opportunities.....IF.....we still have a functional money system.