What does that mean to the small business owner?
That is not a misprint! In the minute it will take you to read this article (better read fast!), the federal government will spend over $2 million more than the taxes it takes in. You can easily verify this information on the Internet. In 2012, the federal deficit increased another $1.09 trillion dollars. That number is so large that I would like to break it down to something us normal people can at least start to understand. So here goes—the federal deficit in 2012 increased:
- $1,089,350,000,000 per year ($1.089 Trillion),
- $90,779,166,667 per month ($90.78 Billion),
- $20,949,038,462 per week ($20.95 Billion),
- $2,992,719,780 per day ($2.99 Billion),
- $124,696,658 per hour ($124.70 Million),
- $2,078,278 per minute ($2.08 Million), and
- $34,638 per second.
And there is no end in sight. The federal deficit is projected to be between $991 billion (CBO in the Washington Times) and $1.33 trillion (www.USgovernmentspending.com), and this is after the huge Taxmageddon tax increases and the Fiscal Cliff sequester cuts to the defense budget
Now I’m a fiscal conservative who believes the government should not spend more than what it brings in. And no, I do not believe we need to increase taxes! Having been a trustee on a local school board for six years, I can tell you that there is tons of government waste in all branches of government. We could cut 25 percent in real costs from every single governmental agency without even trying. The waste is just mind-boggling!
How do I know?
Simple—it’s not their money!
If you don’t believe me, try a little experiment. Pay your kid or your neighbor’s kid to work for you on the weekend. Then take them to the store. Watch how much more careful they are spending the money that they had to earn with hard work than they are with money you give them. That’s how the politicians and government workers are with our money. They just don’t care as much because it’s not their money.
Honestly, President George W. Bush just drove me crazy with his spending deficits during his eight years in office. In fact, I was inclined to agree with then-candidate Obama when he said in 2008 that President Bush’s deficits were unpatriotic.
Well, President Bush was an amateur compared to how fast President Obama and his cronies in the Democratic Senate are spending our money, our kids’ money, and our grandkids’ money! Study the chart below closely, and you will see that the deficit grew by over $2 trillion under President Bush. Sickening! But it grew by over $5 trillion under President Obama.
If President Bush was unpatriotic, than President Obama is a traitor to our country!
Yes, the Republicans have controlled the House since 2010, but they have had very little effect on the budget. Why? Because they are spineless! They know the American voting public really doesn’t support any budget cuts that might affect them or anyone they know.
What does the deficit mean to the small business owner?
Most small business owners will just shake their heads and try to ignore the deficit, because the numbers are just so ridiculously large that they feel there is very little they can do. But this extreme deficit spending will have, and I argue is already having, a very negative effect on small businesses. History indicates that the following are the most likely outcomes of this excessive spending:
- Increased inflation, especially for food, fuel, and any imported goods. What we have experienced so far is just a warm-up to the main event—especially with the feds printing money again under QE3 (Look it up if you don’t believe me.)
- Increased interest rates, as bond purchasers perceive a higher risk.
- Increased taxes—on the federal government level, as it tries to keep the spending levels the same; and also at the state and local levels, which will be dealing with the effects of decreased funding from the feds. Just Google “Taxmageddon” for Round One.
- Increased audits and collection efforts by all levels of government, which will be trying to increase revenues without increasing tax rates.
- Reduced credit for business expansion and growth. The federal government’s increased borrowing will continue to suck investor funds that otherwise could go to small businesses in order to cover its excessive spending.
So what should the small business owner be doing now to prepare?
- Review all current costs and look for ways to decrease them but not affect customer service.
- Improve your business systems in order to accomplish more work with fewer staff.
- Train and cross-train your employees. Again, this will help you accomplish more with a smaller staff.
- Know your cost of providing your product or service and review it monthly. You will need to react quickly to changing product prices.
- Review your pricing and your competitor’s prices constantly. This is vital during rapidly rising prices.
- Improve your marketing so that you reach more prospects, convert more of the prospects to customers, retain more of your current customers, and get more referrals from them.
- Keep in contact with your business customers. They will be price shopping in order to try to stay profitable. You don’t want to lose customers over a small amount. Before you cut prices, resell the benefits you bring to them and how you are really helping them save money.
Finally, pray that the American people and the politicians in Washington start acting responsibly soon.
Oh—and only vote for politicians who understand how serious the deficit is, and how important reducing it is to our country’s freedom and survival. Then hold their feet to the fire. Keep firing them until the Washington politicians get the message that you are serious.