I read a lot; economic newsletters, investment newsletters, industry publications, AICPA updates, Forbes magazine, CFO magazine and the list goes on. I also get various e-mails, listen to webinars and watch videos that correspond to my personal interests. As I consume this information I am always converting what I am hearing or seeing into how this information can be made to benefit dealer distributors or rental companies. Lately, the economic and financial news has become very confusing, especially so for business owners. It seems there are so many real risks in the economy right now that the prudent course of action is to conserve cash while keeping your cards close to your vest. The business and financial risks a business owner has to consider these days are overwhelming, especially in terms of the potential negative impact on business operations and cash flow. Make a mistake in any of the material risk areas and you are in a heap of trouble.

The risks I worry about are:

INFLATION- A real possibility with the funny money being spread around. Is your business in a position to deal with 5 % inflation rates (or greater) for an extended period of time. How will your long-term leases with maintenance look if we move into an inflationary period.

DEFLATION- Some say we have a long way to go to diffuse the total debt of the US economy, and until we do no recovery is possible. If the restructuring of debt takes place to any great extent, asset values will fall. We all know what happened in 2008 and 09 to home values. Are we in for another round of corrections?

INTEREST RATES- A major hike in interest rates is a real possibility. We all are aware of the Fed manipulation of interest rates and what will happen when the Fed stops the QE. Are your lines of credit renewable annually? Will an interest rate hike cause a major bear market? What will happen to your sales number if interest rates start rising. Are you hedging your bets?

CURRENCY RISK- It seems that all the major economic powers are trying to see who can lower the value of their currency the most to stimulate exports. Reducing currency values makes goods cheaper, but imports more expensive. It also makes all your investments less valuable. If any of your brands are imported, the price of your products are going up as the currency value falls.

TAX RISK- Taxes are sure to increase for just about every class. This is especially true if you are in the rental business using a flow-through entity and have an AGI of $200,000 or better. Let’s face it; every form of government is coming at you for more taxes. Better have a good tax person on your side or you will pay more than your fair share.

DEMOGRAPHIC RISK- Not only are the boomers expanding entitlement expenditures, they are also spending less. Because the boomers are the biggest group of consumers in our economy, any reduction in spending will hurt economic growth.

POLITICAL RISK- Is there any doubt our political system is out of control. If there ever was a reason to institute term limits the last four years closed the deal. The long term impact to our current debt levels will haunt us for decades to come.

OTHERS- Throw in our normal business cycles, energy shortages, commodity prices and international issues and you have enough to keep you awake at night.

I for one decided I am not going through another 2008 and am in 100% cash at this time. Since current reasoning is the stock market is the only place to earn a yield these days I conclude the only people investing today are doing it with dumb money. Is there any doubt we are in a market bubble? What will happen when fixed income returns return to the scene, or any major international event takes place? You know the answer.

So there you sit having to make inventory decisions, capital improvement decisions, hiring decisions, health care decisions, financing decisions, expansion decisions, investment decisions and every other decision that comes with managing your lift truck dealership.

With all the uncertainty in our current environment the only prudent course of action is to do the least amount possible until you get a clear picture of where we are headed.

And they wonder why we have an anemic growth rate!

Garry Bartecki is a CPA MBA with GB Financial Services LLC. E-mail [email protected] to contact Garry.