Imagine having a hobby… that you enjoyed… was a lot of fun and that always paid for your cost of living and lifestyle.
Wouldn’t that be worth pursuing?
Does this look like work? Delegates on a our Ecuador tour. In a moment we’ll see a link to Ecuador business ideas.
Having your own small business for extra income is more important now than ever before.
Over the past decade, this site has regularly recommended that one of the best ways to create wealth is… having your own business.
This idea makes sense! Government spending almost assures inflation. Inflation hurts those on fixed incomes, new entrants in the job market and salaried workers the most. Business however always adjust for inflation…. so your own business protects your spending power.
The excerpts below from a March 2010 Atlantic Magazine article “How a New Jobless Era Will Transform America” By Don Peck shows the concern: The Great Recession may be over, but this era of high joblessness is probably just beginning. Before it ends, it will likely change the life course and character of a generation of young adults. It will leave an indelible imprint on many blue-collar men. It could cripple marriage as an institution in many communities. It may already be plunging many inner cities into a despair not seen for decades. Ultimately, it is likely to warp our politics, our culture, and the character of our society for years to come.
How should we characterize the economic period we have now entered? After nearly two brutal years, the Great Recession appears to be over, at least technically. Yet a return to normalcy seems far off. By some measures, each recession since the 1980s has retreated more slowly than the one before it. In one sense, we never fully recovered from the last one, in 2001: the share of the civilian population with a job never returned to its previous peak before this downturn began, and incomes were stagnant throughout the decade. Still, the weakness that lingered through much of the 2000s shouldn’t be confused with the trauma of the past two years, a trauma that will remain heavy for quite some time.
The unemployment rate hit 10 percent in October, and there are good reasons to believe that by 2011, 2012, even 2014, it will have declined only a little. Late last year, the average duration of unemployment surpassed six months, the first time that has happened since 1948, when the Bureau of Labor Statistics began tracking that number. As of this writing, for every open job in the U.S., six people are actively looking for work.
All of these figures understate the magnitude of the jobs crisis. The broadest measure of unemployment and underemployment (which includes people who want to work but have stopped actively searching for a job, along with those who want full-time jobs but can find only part-time work) reached 17.4 percent in October, which appears to be the highest figure since the 1930s. And for large swaths of society—young adults, men, minorities—that figure was much higher (among teenagers, for instance, even the narrowest measure of unemployment stood at roughly 27 percent). One recent survey showed that 44 percent of families had experienced a job loss, a reduction in hours, or a pay cut in the past year.
The Long Road Ahead
Since last spring, when fears of economic apocalypse began to ebb, we’ve been treated to an alphabet soup of predictions about the recovery. Various economists have suggested that it might look like a V (a strong and rapid rebound), a U (slower), a W (reflecting the possibility of a double-dip recession), or, most alarming, an L (no recovery in demand or jobs for years: a lost decade). This summer, with all the good letters already taken, the former labor secretary Robert Reich wrote on his blog that the recovery might actually be shaped like an X (the imagery is elusive, but Reich’s argument was that there can be no recovery until we find an entirely new model of economic growth).
Historically, financial crises have spawned long periods of economic malaise, and this crisis, so far, has been true to form. Despite the bailouts, many banks’ balance sheets remain weak; more than 140 banks failed in 2009. As a result, banks have kept lending standards tight, frustrating the efforts of small businesses—which have accounted for almost half of all job losses—to invest or rehire. Exports seem unlikely to provide much of a boost; although China, India, Brazil, and some other emerging markets are growing quickly again, Europe and Japan—both major markets for U.S. exports—remain weak. And in any case, exports make up only about 13 percent of total U.S. production; even if they were to grow quickly, the impact would be muted.
Most recessions end when people start spending again, but for the foreseeable future, U.S. consumer demand is unlikely to propel strong economic growth. As of November, one in seven mortgages was delinquent, up from one in 10 a year earlier. As many as one in four houses may now be underwater, and the ratio of household debt to GDP, about 65 percent in the mid-1990s, is roughly 100 percent today. It is not merely animal spirits that are keeping people from spending freely (though those spirits are dour). Heavy debt and large losses of wealth have forced spending onto a lower path.
So what is the engine that will pull the U.S. back onto a strong growth path? That turns out to be a hard question. The New York Times columnist Paul Krugman, who fears a lost decade, said in a lecture at the London School of Economics last summer that he has “no idea” how the economy could quickly return to strong, sustainable growth. Mark Zandi, the chief economist at Moody’s Economy.com, told the Associated Press last fall, “I think the unemployment rate will be permanently higher, or at least higher for the foreseeable future. The collective psyche has changed as a result of what we’ve been through. And we’re going to be different as a result.”
One big reason that the economy stabilized last summer and fall is the stimulus; the Congressional Budget Office estimates that without the stimulus, growth would have been anywhere from
The economy now sits in a hole more than 10 million jobs deep—that’s the number required to get back to 5 percent unemployment, the rate we had before the recession started, and one that’s been more or less typical for a generation. And because the population is growing and new people are continually coming onto the job market, we need to produce roughly 1.5 million new jobs a year—about 125,000 a month—just to keep from sinking deeper.
And even within industries that are likely to bounce back smartly, temporary layoffs have generally given way to the permanent elimination of jobs, the result of workplace restructuring. Manufacturing jobs have of course been moving overseas for decades, and still are; but recently, the outsourcing of much white-collar work has become possible. Companies that have cut domestic payrolls to the bone in this recession may choose to rebuild them in Shanghai, Guangzhou, or Bangalore, accelerating off-shoring decisions that otherwise might have occurred over many years.
New jobs will come open in the U.S. But many will have different skill requirements than the old ones. “In a sense,” says Gary Burtless, a labor economist at the Brookings Institution, “every time someone’s laid off now, they need to start all over. They don’t even know what industry they’ll be in next.”
“We haven’t seen anything like this before: a really deep recession combined with a really extended period, maybe as much as eight years, all told, of highly elevated unemployment,” Shierholz told me. “We’re about to see a big national experiment on stress.”
Those of us who start and own small businesses do not have to join the stress.
The changes that brought on the recession and unemployment also created opportunity for those who embrace change and innovate.
The Atlantic article also said: Ultimately, innovation is what allows an economy to grow quickly and create new jobs as old ones obsolesce and disappear. Typically, one salutary side effect of recessions is that they eventually spur booms in innovation. Some laid-off employees become entrepreneurs, working on ideas that have been ignored by corporate bureaucracies, while sclerotic firms in declining industries fail, making way for nimbler enterprises.
In with the new… small… fun… innovative businesses. Out with the old… big…complicated, stressful work.
Here are three tips for success with your own small business.
Tip #1: Live beneath your means. Start small… build upon existing skills and grow in relationship to your situation.
Small beginnings are nature’s way. Most businesses start with a learning curve. During the beginning and in the initial learning period, it is essential to remain small as you err. Once lessons have been learned, the business can grow using business evolutionary cycle.
The small business evolutionary cycle is:
#1: Get an idea
#2; The idea leads to enthusiasm.
#3: The enthusiasm leads to education.
#4: The education leads to action.
#5: The action leads to profit or loss but also more ideas.
The cycle repeats and this is the way that businesses should grow.
This is why one of the favorite workshops I teach is “Early Wealth” for kids. This is sometimes conducted before other adult courses and sometimes presented to groups of school kids.
They love it and soak up the information on how to attain wealth.
The course begins by showing a dollar bill and a candy bar and letting the kids choose which they would prefer. Some choose the candy, others cash. But twenty-six more dollar bills are taped to the first and they then unfold. Now the kids see twenty-seven dollar bills dangling before them and they are asked to choose again. Kids are not stupid. They take the twenty-seven bucks and in the process learn the power of compounded interest.
If they take a dollar and put it in the bank, even at a low interest rate it grows to twenty-seven by the time they reach age 65.
Many of the parents at this workshop tell me they wish they had had this when they were younger as I point out the importance of starting early.
This chart shows that a person who saves $4,000 a year for ten years ($40,000 total) from age 19 to 29 and leaves it earning 8% per annum compounded will have $1,097,285 at age 65. This is compared to a person who saves $4,000 a year ever year from age 29 to 65 ($148,000 total) has only $877,264.
Then we have the banker’s race. Two children are selected, one a large boy, the other a small girl. They race as they drag a fifty pound bucket of mud. Each selects five bankers. The difference is the girl has been good and saved money so her five bankers help her pull the bucket. The boy, who has been bad and borrowed money has to drag the bucket and his five bankers. You can guess who wins the race.
These lessons are based on the expectation that a social code will be adhered to… that rewards capital. Those who are frugal, save and invest will enjoy greater financial security then those who just spend.
Tip #2: Expect inflation. Save and invest in a business…. your own or someone’s else’s… not cash.
Government’s globally now and throughout history have tended to cheat on this economic honor system… as they are doing so badly now.
For example, the US government… already deeply and growing deeper in debt has initiated a new program to help American borrowers who have been clobbered by falling home prices, the government has created a new plan to help those who own property that is worth less than its mortgage. The plan has several strategies including requiring mortgage servicers to consider cutting a loan’s principal if it is up to 15% more than the home is worth.
Because additional debt is most likely to deteriorate the value of the dollar, those who lived above their means… or speculated on real estate or bought real estate they really could not afford are being rewarded. So too are banks who did not vet their borrowers carefully enough.
The government’s explanation for this additional spending is that the cost to taxpayers is less than the cost of not doing something.
Yet the simple reality is that these rewards are at the expense of those who have saves and lives beneath their means. Those who will be punished most are those with fixed incomes and cash.
This is not just a US phenomenon either. Governments are going deeper into debt everywhere… spending money that does not create goods.
Warren Buffet recently commented on this when he purchased a railroad for $27 billion. He said: Cash is always a bad investment. When people said cash is king a year ago, that [was] crazy. Cash wasn’t producing anything, and it was sure to go down in value over time. And then you always want to be sure you have enough. It’s like—like oxygen—you want to be sure it’s around, you know. But you don’t need to have excessive amounts of it around. We will always have enough cash around. But anytime we have surplus cash around, I’m unhappy. And we found a chance in the last year, thereabouts, to deploy [it]. We came in with something over $40 billion in cash. We have got about $20 billion now, and we’ve had some earnings. So, we’ve put a lot of cash to work. And I like that. I’d much rather own a good business than have cash. . . . [BNSF] is not a bargain, but it’s a good asset for Berkshire to own over the next century.
You can say all assets are a hedge against the dollar. All you know is that the dollar is going to be worth less 10, 20, 30 years from now. I say “worth less.” Not worthless. You want to watch that. [It’s] true of almost every currency I can think of. The question is how much it depreciates in value. But cash is not a place. We’ll print more of [it] in relation to the amount of goods that are moving. If we dropped a million dollars of cash into every household in the United States today, everybody would feel very good except the people that invested in things that were denominated in dollars.”
Yet most of us don’t have an extra $27 billion lying around. In fact many of us may not have enough cash to convert into inflation fighting assets. Instead we need more income.
These facts alter the way we must live and invest… with a shift towards holding inflation fighting assets… like a small business.
Fortunately science and technology has truly set us free. An internet business can help us earn income.
Plus isn’t the goal here to enjoy life… without living beyond our means?
An internet business can help us turn our passion into profit and earn income in enjoyable ways.
For example I love to write. My internet business allows me to do so in places I want to be.
Here I am with our hound working at our Florida home.
Technology has destroyed the limitations imposed by time and space and an internet business gives us freedom to earn and be mobile. We no longer have to be stuck in one place.
I can sit in my office in North Carolina and work.
with this view. (You can see that my hound dog wants me to hurry up and get out on the mountain!)
Or hike into our Blue Ridge forest and work.
You can see that now she is happier!
Or visit Ecuador’s beaches and work.
Tip #3: Look for and solve problems that are important to you.
For example if environmental problems are important to you, think about sustainable farming. America only has two million farmers. Their average age is 55. Sustainable farming needs small-scale, local, organic methods rather than petroleum-based machines and fertilizers.
There is a dramatic demand for more small sustainable… small modern farmers… small business people who become skilled in heirloom produce and new ways of marketing.
This is one reasons why I have been posting messages about EnviroSafety Bio Wash and farming.
This is a good idea for Smalltown USA which is one reason why we now have a Florida orange grove business and a North Carolina sustainable forestry business. We are to test bio wash on citrus growing and fighting greening. See more here at Bio Oranges
This also offers a great Ecuador organic farming idea. See more here.
Join Merri and me and our webmaster, David Cross, and Jyske investment adviser, Peter Laub, to learn more about business, investing, health and Ecuador this June at our Quantum Wealth seminar where we share ways to invest, do business and live that protect wealth as they bring joy, satisfaction and better health.
How We Can Serve You
Read the entire Atlantic Magazine article How a New Jobless Era Will Transform America here.