That is not a misprint! In the minute it will take you to read this article (better read fast) the federal government will spend $237,823 more than the taxes it takes in. You can easily verify this information on the internet and you will see that the federal deficit is projected to increase $1.5 trillion dollars this year. But, 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 is increasing:
- $1,500,000,000,000 per year($1.5 Trillion),
- $125,000,000,000 per month ($125 Billion),
- $28,846,153,846 per week ($28.8 Billion),
- $342,465,753 per day ($342.4 Million),
- $14,269,406 per hour ($14.3 Million),
- $237,823 per minute and,
- $3,964 per second.
Most small business owners will just shake their heads and try to ignore it since the numbers are just so ridiculously large and 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 is the most likely outcome of this excessive spending:
- Increased inflation. Especially for food, fuel and any imported goods.
- 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.
- Increased audits & 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 governments increased borrowing will continue to suck investor funds that otherwise could go to 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 that will not affect customer service.
- Improve your business systems in order to accomplish more work with less staff.
- Train and cross train your employees. Again, this will help you accomplish more with less staff.
- Know your cost of providing your product or service and review them monthly. You will need to react quickly to changing circumstances and product prices.
- Review your pricing now. I just emailed a business tip on this. If you didn’t receive it email me at Wayne@wjb-cpa.com and I will send it to you.
- 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.
Finally, pray that the American people and the politicians in Washington start acting responsibly soon.