Forums: Discussions for entrepreneurs and small business.

Craig sorry about the tangent, I was feeling a bit out there yesterday.

The economy problems going on now, sound a lot like what My grandparents used to talk about of the "great depression". I am not old enough to know but I am old enough to have lived with people that lived it.

As I reflect I wonder, did they always keep three months of bills in cash in the box in the pantry? did they always have 3 or more months worth of food in the pantry? did they always darn their socks when they got a hole? did they always find a way squeeze every cent out of every dollar? did they never care about fashion? why were they always afraid of getting a credit card, why did they not buy a house until they could pay cash? why did they not even own an air conditioner let alone use one?
Looking back I think those relatively few years of their lives changed their lifestyle forever.
My grandfather was born with a silver spoon, and he always said he could not believe it all went away in a day, and he would never let that happen to him again.

In truth I am looking forward to the crash, I think the giant reset button in the sky once pushed will bring people back to a quality in moderation mentality. rather than if it`s cheap enough I`ll take two.

The one thing that is a bit scary, and it already is starting. I don`t do anything all that high tech, I cut up wood and put the pieces together in a different order. it isn`t all that hard (that`s why every guy that retires says that`s what he`ll be doing when he`s not fishin), I do it because I love to do it, with unemployment in new jersey at 7.1% this week, people have to do something to get by, probably 1 in 4 households have the basic tools to do what I do, and the internet is just giving away the plans, the competition for me I expect is going to explode out of desperation. I suppose not all small business is of passion, some are of desperation.
One last question, do you think ranking high on a search is going to be all that good when it`s the would be competition checking out your prices so they can under cut you a few cents. or they want to get into your niche.

time will tell, I for one can`t wait.

Stan,
One of the key concepts of entrepreneurial success comes from a story I read, awhile back. It was about an author who was addressing a convention of writers. This author was okay, perhaps mediocre, and someone in the audience wondered how he`d been successful.

His answer; "It`s very simple....I actually write the books instead of just talk about writing them." :-)

Why do you suppose that if it`s so easy to stick wood together and make furniture, and if 1-in-4 people have the tools, that there isn`t a flood of home-built furniture? :-D

Bottom line is that it`s easy to talk about putting together a business. It`s easy to have "gonna-rhea," where you`re "gonna" do this, and "gonna" do that. But it`s not so easy to actually put that business idea into action. It`s not easy to persist, stick with it, be disciplined, and meet customer demands.

One reason for the coming fragmentation is that we`ve developed a 50-year population of people who believe that everything can be "fixed in an instant," with a pill or by throwing money at it. Everything is a commodity, nothing is unusual, and mass production is the solution to everything.

People are tired of cheap crap coming off assembly lines in China!

The world is totally split between two fundamental value systems. The socialists value nothing, and consider expertise and personal effort "luck," which should be redistributed to make everyone equal.

Capitalists hold that personal effort and personal choice should be rewarded based on merit. The world isn`t fair, and charity is a better solution than forced redistribution.

Since we can`t at all reach an equitable resolution to these two antithetical value systems, reality itself will have to be the final arbitrator. As such, anyone who understands reality has a better chance of surviving the next decade than those who hope that whatever they wish will happen is more likely "true" than actual reality.

I`m not too sure I can see fragmentation happening...or at least across all industries in the near future.

With our economic problems has caused even more consolidation. Investment banks have literally been swallowed up into commercial banking and depository institutions overnight, where the only two remaining investment banks have obtained licenses to become bank holding companies.

Yes car companies may divest certain brands, and it has already happened. But this has been followed up by these brands being purchased by other large or private equity companies--ie: Tata buying Jaguar and Landrover, and Cerberus buying Chrysler.

The fact is that with this economic collapse, customers want to spend as little money as possible. A small business owner will have difficulty offering the same products for the same price that the big guys offer because the larger companies have the benefit of economies of scale--their mass allows them to produce for cheaper.

Also, any businesses that are divested will just be gobbled back up by other bigger guys. Think about it--a troubled asset is divested and is sold for a steep discount. Who is more likely to have the cash to purchase these businesses? Furthermore, who will have an easier time getting a loan? The little guy will be perceived as risky to banks, and the bigger more credit worthy businesses who have more industry "experience" will be much more trusted by banks. Thus, if the larger companies don`t have the cash to purchase the divested businesses, they will have a much easier time getting a loan than a start-up would.

That doesn`t mean we won`t see some fragmentation, but think well find this fragmentation few and far between. As far as entrepreneurship, I think we will see (and have seen) a large wave of startups due to the high unemployment.



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Motivation for Entrepreneurs
Entre-Propel.com

Some good points, but look at it a little differently. Say you live in a town that used to have an ice cream shop, shoe store, butcher shop, and a small general grocery store. Then Wal-mart comes to town.

Before long the small stores go out of business, for the reasons you`ve said above. People like the convenience of 1-stop shopping, low prices, and most importantly, the *same* availability they used to have. In the past, they had to go to many locations to get each item, but all of those items were available.

Then came the age of "gobbling up." :-) Wal-marts, Targets, Home Depot, Lowes, and so forth all consolidated everything. They bought a lot from China and we imported lots of product.

When I say fragmentation I don`t mean only simple things like brands. What happens when Wal-mart doesn`t have all the things we used to want? What happens when Home Depot needs to cut costs and stops carrying this or that?

How about product knowledge? When was the last time you walked into a store and asked a sales person for useful information? Then there`s the growing "buy local" idea of people wanting to support individual stores.

It`s true that in tough economic times the investment in startups will be harder. But we also, I think, will have a growing number of "niches." Customers will want the availability, quality, knowledge, and service.

To my mind, fragmentation means that 1-stop shopping, consolidated "everything stores," and the problems of mass-merchandising and mass production are growing. At the same time corporate policies of operational cost-cutting and debt-financing are also growing.

I also think people will continue to want things. Where there`s a market, someone usually will find a way to satisfy that market. So two things likely will happen. The one is that Americans will have to buy less and be satisfied with less as we go to cash spending.

The second is that as people spend less, reduce their overall spending, and pay more attention to repairable, quality items, the super stores won`t be able to support the economics of scale anymore.

From the news: Community banks are on the rise.