“Stocks buckled Thursday under the growing belief that the global economy is weaker…the Dow Jones industrials briefly traded below 10,000 for the first time in three months.”

Granted, it all sounds very scary and dramatic but what does it mean?

The Dow Jones is an economic indicator.  A fairly complex index of 30 publicly traded companies based in the U.S. that measures their trades in the stock market during a single session.  Self explanatory right?

As business owners, it’s not the value of this economic indicator that is so important but the cause of the over all change.  It’s sometimes hard to read between the lines of these financial reports but that is exactly what needs to happen in order to judge the effects this may have on our business and view that information objectively.

The report continues as follows:

“A flood of bad news, including rising debt levels in European nations and an unexpected jump in the number of Americans filing for unemployment benefits, had investors pulling money out of assets like stocks and commodities that look increasingly risky. Fears of more disappointing news Friday, when the government issues its January employment report, contributed to the slide.”

While the Dow is based on U.S. companies, it is known to be influenced by foreign politics and events which accounts for the mention of European debt, but as business owners, our focus should lay on the second subject of unemployment.  We’ve all seen the reports about the decrease in new jobs and the increase in unemployment. This has an adverse effect on our current economy, but what does it mean for our businesses?

It means that the market is inundated with skilled and experienced people eager to put their best attributes to work for your business.  We all know the difficulties that come with hiring the right people to work in our business and yet, even in these times when companies are receiving hundreds of applications for a single open position, they’re still finding it hard to find the right people. 

As business owners, we need to take advantage of this unique climate to better ourselves and our position in this market.  Many times we find ourselves so wrapped up in day to day operations that it’s hard to step back and take an objective look at our business to see how we can make it more efficient and profitable.  Right now I think one of the most effective things we can do is to develop the policies and procedures of our human resources to maximize the efficiency of our workforce. 

Often times wages are a companies largest expense.  What are you doing in order to get the most from your employees?

Credit for the quotes and information go to Associated Press Business and Yahoo Finance.

The poll of entrepreneurs states that:

• 61% say the economy is on the wrong track
• Over 70% do not expect to create new jobs in 2010
• 85% think the U.S. is a great country in which to start a business

Right away they discuss the obvious contradiction made by these statistics that even though entrepreneurs believe the economy is on the wrong track and do not expect to create new jobs that it is a great country in which to start a business.  I find this to be very interesting due to the nature of the questions themselves.  When reading a poll like this, you have to ask yourself why.  Why is it that these entrepreneurs answered the way they did?

Let’s look at the subject matter.  The first two questions are about the economy and creating new jobs. What is the guiding force that drives the answers to these questions?  The answer is money.  More specifically, growth and income.  Now that we’ve revealed the basis of these answers, not only does the media remind us daily of the poor state of the economy, but more importantly, it is reflected in our cash flow reports and profit and loss statements.  Also, when growth is rare and flat or falling sales is reported as the status quo, it’s no wonder over 70% of entrepreneurs polled are not planning on creating new jobs. 

But we have to remember that we, as entrepreneurs of small and new businesses are the life blood of our economy. It is up to us to raise the bar and bring growth back into the market. We’ve realized our potential, it’s right there in the poll, “85% of entrepreneurs think that the United States is a great country in which to start a business”.

There you have it.  A large majority of entrepreneurs have their heads in the right place, we believe this market can provide the growth and profitability needed by new companies.  We, as business owners, need to be diligent and stay informed so that we can learn from the failed businesses across the U.S. and use proven business practices, solid business planning, refined financial management, marketing development and strategic planning mixed with our knowledge and unique outlook to grow and strengthen our businesses and the economy as a whole along with it.

Carl Schramm says during this interview that, “Overall…we’re not seeing robust recovery [but] entrepreneurs are the key to [recovery] they are the people who create the jobs”.  He also states that, “In the past seven recessions and recoveries that we’ve seen, it has been … the expansion of employment in brand new businesses. Businesses that are less than five years old, that have been critical in the recovery and the expansion [of the economy]“.

Remember looking at the facts can remind us of the huge potential for your business:

• Up to 80% of new hires come from small and new businesses
• Nearly all net job creation in the U.S. comes from firms less than 5 years old
• 50% of Fortune 500 companies were founded in a recession or bear market
• 600,00 new firms form in the U.S. every year; even during recessions

Read Carl Schramm’s entire State of the Entrepreneur Address and poll results here.

As business owners, do you think something like this would truly motivate you to hire additional employees?

As potential employees, do you think this is the best the government could do on your behalf to promote additional hiring?

Tell me what you think.  Is this a good idea or a bad idea? Will it make any difference at all? Is it a long term solution or is it just one more meaningless tax incentive offering a short term solution with not enough real benefits on either side of wall?

Here is a short description of the story by The Slatest

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Momentum Grows for a Job-Creation Tax Credit    

It’s a tool that was last tried in 1977, but now there seems to be growing support for awarding a tax credit to businesses that create new jobs. The measure was actually included in the stimulus package, but it was jettisoned before it was approved due to concerns that companies could exploit the system. Now, more politicians seem to believe that while a little abuse might be inevitable, it could still be a good, and relatively cheap, way to create jobs at a time when the unemployment rate is inching closer to 10 percent. When the same system was tried in the late 1970s, there were questions about whether the jobs that were created were permanent, and many doubted that the companies would have created the new jobs eventually without the credit. Now advocates of the system say that they can learn from the mistakes of three decades ago to make sure a job-creation tax credit has a bigger bang this time around. But, of course, it seems inevitable that the credit would help companies that would be hiring whether there’s a tax break or not. Whatever ends up happening, lawmakers need to either pass the measure quickly or drop it completely because companies might delay hiring if they think the tax break is in the pipeline.

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Read a full article on the subject at NYTIMES.COM.  One important issue from the report is a description of the actual benefits that will be seen by businesses in one of the proposals currently being reviewed by the legislature:

Under the proposal from Mr. Bartik and Mr. Bishop, the credit in the first year would equal 15.3 percent of the cost of adding an employee. In the second year, it would fall to about 10.2 percent.

For example, hiring a worker might cost a small business $50,000 annually. But with the tax credit, the cost would fall to $42,350 in the first year, and then be $44,900 the next year. After that, the cost would return to $50,000.

The credit would apply only to the portion of an employee’s salary under $106,800. Lowering the cap further, however, could provide an even greater benefit to low-wage, unskilled workers.

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