Or is it? 

Because right now, in July 2020, if you’re still doing business and surviving… well, there *is* some clarity in that. The big “shutdown” bomb went off this past spring, and you survived. You crawled out, dusted yourself off, and said “ok, what do we have to work with?” And whatever the answer is for you, you’re working with it. 

In other words, if you’re still here, and the numbers are black (or close to black), then you should feel reasonably comfortable that you are not only going to survive, but you are probably going to eventually thrive. Will things look different from a year ago? Absolutely – you may have a smaller workforce, it may be partially (or fully) at home, and you may have lost some customers (but perhaps gained others, maybe from places you never expected.)  

I’ve had conversations with plenty of small and medium businesses the past few months. Some were affected greatly. Some had an initial dip, then came back. Some even had unexpected surges. But the big takeaway I’ve had as the summer takes hold is businesses are still financing equipment. Like everyone else, we lost some customers, but gained others. 

Of course, certain industries got hammered (restaurants, bars, gyms, indoor mall retail stores), but others have really risen. Home exercise equipment. Bikes. Cleaning supplies and tools. Lots of desktop computers for home offices. Etc. 

But those are extremes that make the news. The truth is, most companies are somewhere in the middle. And where you are today should give you a little clarity on where you will be tomorrow. The businesses who survived the initial hit (and there are millions of you) are starting to recognize their resiliency. This is a powerful feeling, because it gives a little clarity in an unclear time. 

In the end, if you are “making it” NOW, making it tomorrow probably isn’t going to be an issue.

I had a post ready about something equipment financing related, but it doesn’t seem appropriate today. I’ll post it sometime in the future, but for now, a few words on what’s going on, and what I feel will be the outcome.

First, I have to address the obvious – for some businesses, the COVID-19 crisis will change an awful lot. A restaurant that was already on the ropes may not survive a month or two of “takeout only”. And for some newer businesses that don’t have their feet under them yet, this is super challenging and could derail them. 

But whether you’re seeing a slowdown or not, remember this: there are millions of businesses that survived other large bumps in the road. 9-11. The Great Recession. Etc. And again, I realize the COVID-19 crisis is neither of those, but the fact remains that on the other side of this, companies will emerge, and many of them will be stronger than ever. 

Right now, some companies are using this time to re-tool. Smart, seasoned businesspeople know this will pass, and it will have to pass quickly as well. A month or two may seem like forever if your kids are home from school and you’re reading the news on an hour to hour basis, but again, smart, seasoned businesspeople know a month or two is an eyeblink.  

When we go back to normal (and I admit it will be a bit of a “new normal” for a while), how will you emerge? Will you be ready to hit the ground running? Your competition may have holed up and watched Netflix – what did you do? Did you repair, retool, rebrand, replace, reassess, etc.?  (boy that’s a lot of “R” words. Unintentional on my part!) 

It’s a certainty that we are all going through something unprecedented. But it’s also a certainty that it will end, and commerce will resume (probably in force from pent up cabin fever!) What is your plan for then? Do you have one? I hope you do, because if you’re slow or at home, THAT’S how you should be spending this time. Netflix will still be there tonight. 

I subscribe to several business-related newsletters and e-zines. There’s nothing like timely business and financial news hitting your inbox every day. My wife thinks it’s boring, but then again, she spends hours looking at pictures of food on Pinterest. I try to tell her that mine is more interesting, because money buys food, but she counters with “you can’t eat money”. Ok then.

But I received some good news in the inbox the other day from the National Federation of Independent Businesses (NFIB), which is the nation’s leading small business association. They report that small business optimism is at a 45 year high.

45 years. This surpasses the booms of the 80’s and 90’s, and we all have to admit, things were pretty good then. But they are better now.

But you know, it took me a minute to think about it to realize just how good things are right now. That’s because the news cycle is dominated by a lot of negatives regarding business – people upset over minimum wage, income inequality, loss of manufacturing, and more. You would think that business is terrible. But it’s not.

Small and medium businesses are thriving. Have you called a plumber or a carpenter recently? They have waiting lists. Have you gone car shopping lately? If you see a model you like, you’d better pounce, because they might not get another black Model XYZ for a while. My neighbor just waited three weeks to get a tree removed, and this year, Mrs. Fletch and I are replacing our above-ground pool. We went shopping in January, and even then, the pool company was backed up into June for new installs. And realistically, we’re probably looking at July.

So we’re in a good place, business-wise (although getting our pool earlier would be nice, of course). And that’s going to lead to my next post, which is (predictably) going to discuss some equipment financing, Section 179, and using this optimistic wave to improve your business.

Ignore the negative news – things have been good for a while now, and they are looking better every day.   

• 2009 will be tough for many folks. There is no way around that. Jobs will disappear, and workers will be displaced (made redundant, downsized, rightsized, kicked to the curb, kicked to the curb with a steel toed boot, kicked to the curb with a steel toed boot and run over by the company limo on the way to a corporate retreat, etc.)

• Unemployment will rise. 8%… 9%… heck, there is a possibility that we will see double-digit unemployment in some areas. I will attribute this to several factors: the obvious downsizing in many industries, coupled with an increased aggressiveness in offering retirement incentives to older, higher-paid baby-boom workers.

• But from this chaos will come opportunity as well – it will present a chance for many companies to differentiate themselves from weaker competition. Like you’ve heard me say here before, it’s easy to compete in good economic times. So 2009 will cull the herd a bit in regards to established companies.

• Related to the above, companies that traditionally used cash will now look to leasing more and more. Equipment leasing can still be had, and companies will find out that it’s pretty darn profitable as well. However, lease terms will continue to tighten some, as equipment finance companies and banks look to limit losses and bad debt. But again, strong companies will be able to get credit.

• Continuing on the opportunity theme, not every laid off / displaced / “asked nicely to leave” ex-employee is going to sit in his or her Barcalounger watching Wheel of Fortune. 2009 will see record numbers of small business startups.

• Those small businesses will need help, and the new administration will answer. I predict the Economic Stimulus Act of 2008 will be renewed, and perhaps even enhanced. Meaning my old buddy Section 179 gets a nice little facelift.

• In fact, we will see several attempts by the government to help businesses. Meaning we may see the return of the Temporary Investment Tax Credit (MIA for almost a quarter century). Personally, my industry (equipment finance) would love to see something like this.

• The Titans will win the Super Bowl, the Yankees will win the World Series, the Celtics will win the NBA title, and the Red Wings will win the Stanley Cup.

• The Dow will fluctuate wildly – one day, it’ll be doom and gloom, then there will be a rally. Wash, rinse, repeat. Antacid sales on Wall Street triple. And at the end of the year, the Dow will sit right around 8400.

• Fuel prices have had enough of the roller coaster that was 2008. Demand has dropped, and will stay at lower levels, somewhat stabilizing fuel prices.

• Lastly, in order to stimulate the local economy, the government establishes the “FletchFund”, enabling the purchase of home theater equipment, a pool table, and that sweet tractor at Home Depot (the big one.) This is a fairly necessary step for a healthy 2009, and one I encourage Obama get right on.

2008 was interesting, wasn’t it?

We had an historic election, we had $4 a gallon gas (thankfully only for a short time), we had a huge bailout of the financial industry, we had a credit crunch, and the sky fell, too. Ok, the last part is fake, but geez, you’d think the sky fell by watching the news.

Anyway, it’s clear that many businesses did not do as well as they hoped they would do this year. But there still may be one more magic bullet left to help the 2008 bottom line and that bullet is to take advantage of Section 179.

Of course you know what Section 179 is, right? It’s the provision of the US Tax Code that allows a business to deduct the full purchase price of (most) equipment bought and put into use this calendar year. It’s been a pretty big deal for years, as savvy businesses used this tool to lessen their tax burdens  and in many cases, substantially lower it.

This year, thanks to the Economic Stimulus Act of 2008, the limits of Section 179 were made much higher. This means you may be able to markedly lower your tax bill if you buy (and put into use) qualifying equipment before midnight, 12/31.

Heck, you may even make a profit.

What do I mean by that? Well, if you combine Section 179 with equipment financing (or equipment leasing), you may very well actually profit by buying new equipment. Here’s how: You buy equipment for, say, $100,000, and deduct the entire purchase price. The tax savings, at a 30% rate, would be $30,000. But you financed this equipment you put down $10,000, and financed the other $90,000. Since we are in December, payments don’t start until 2009. So you saved $30,000, and laid out $10,000, resulting in a net profit of $20,000 added to the calendar year 2008.

That isn’t fiction, companies do this all the time. It’s a way to take advantage of the generous tax savings the government allows you  – just finance the equipment, and it’s almost a given that you’ll save more on taxes than you will lay out this year.

Have a Happy New Year!