The news came out today from the Bureau of Labor Statistics and the Department of Commerce. Productivity for the last quarter rose by an astounding 9 percent! Astounding because the official unofficial unemployment figure is now around 18 percent, and in some states over 20. Further, the BLS and DOL reported that another 570,000 jobs were lost last month.
Okay, Houston (and New York, and Atlanta, and Portland, and Sunnyvale), we have a problem. Businesses have learned that you can indeed get more work out of fewer people, and in the process of learning this, businesses have also learned how to do without, without staples (sic) and without wages or Workers' Comp and health insurance.
You would think that businesses are in the catbird seat, and the big ones are. Not only is there competition for takeovers and killing off the competition, but there's competition, not for better people, but to cut costs so that the bottom line looks good to stockholders. The smaller companies which are supposed to be the backbone of the nation are running scared. While they do lay off employees, they do so reluctantly. They're not used to this.
While smaller companies want to become bigger companies, they cut costs and staff, and don't rehire or restock because they're afraid to. What if, as they did last Christmas, over-order and get stuck with the overage? This is a special concern in states which still have inventory taxes.
Smaller companies have also been hit hard by their banks. A recent report showed that as many as 70 percent of very small companies have had their credit lines reduced substantially. I was glancing at the news, and one garage owner (with six employees) had his credit limit on his business charge card reduced from $5,000 to $800! I spoke with a doctor this morning whose $15,000 Platinum business card is down to $1,000. And if you Google "credit limit reductions," consider spending the rest of your life reading such anecdotes.
Now I know that the majority of businesses aren't run on credit cards. No indeed. They're run on credit.
So, you have a triple play: increased productivity, fewer employees, less money. What is the average worker supposed to do? Where are the jobs going to come from for this generation?
Answer. I don't know. But here's a suggestion. If you have a special skill, sell it on a part-time, contractual, retained, or hourly basis. This means writing, not a resume, but a business brochure and setting up a Web site. (The resume becomes part of the site.) If at all possible, choose a name for the site that gives a hint as to what you do.
Write down a list of your skills. Those will be your services. Then combine them in as many ways as possible to create packages. Now, price those services and packages. Price them by the hour, month, quarter, year. NOW, write the front page of your Web site. Briefly, who are you. Briefly, what do you do? Briefly, who have you worked with? If you've had clients, make that a separate page. Each of these become separate pages.
If you can give speeches, join organizations that are comprised of others, not others in the same boat, but others with similar skills. Chair a committee. Moderate a forum. Write a blog. Do anything you can to become a recognized figure in your skill and in your geographical area.
Money. First, stop spending it. Next, what you spend should be toward the goal of selling your skills. It used to be (gag me) "building a business."
The other quandary: At one time, there were venture capitalists who were more than willing to listen to someone with skills or products and invest in that individual or new business. The preceding advice is not for someone whose invented something or has a product to sell. You're going to get taken before you make a dime. This advice is for people with skills or specialized knowledge and selling those skills or knowledge. There are still venture capitalists out there who would be willing to give seed money to an individual or a group of individuals who have the skill sets (not just ideas) for a piece of the action. I can't tell you how to avoid the pitfalls in taking or being taken, but personally, I want my venture capitalist to be a "silent partner" unless s/he knows something about the business or has something positive to contribute other than money. Second, if you're over 40 or you've done a hard 35, go with your gut. Consult your spouse. I'm talking about consulting our spouse about bringing in another person, even one who's willing to give you more money than you need.
Now I'm speaking from experience. Once you're successful, there will be all kinds of people who are willing to lend you money. You need someone who gambles a bit and understands what you do and how you intend to reach your goal. And never give away the farm ... to someone with money, or someone who's looking for free advice. Make believe you're an attorney. How much advise do you give away free before you start charging for your services? You're a mechanic. You going to tell the guy how to fix his old clunker or are you going to tell him just enough to say, "Well, I can fix that for your for $700, and that will save us both a lot of time and trouble."
Think back just five years. Do you remember anyone who opened a clothing boutique (in a mall yet) because she knew "fashion?" How about an antique store because he or she loved "quaint things." I can could at least 10 such stores that have gone belly up in the past year on one block in an affluent community nearby ... or maybe it only looked affluent. Well, just because you love animals doesn't man you can sell your skills as a vet unless you are a vet.
No, the new jobs will be - just as Drucker predicted - the knowledge worker. The difference is that Drucker didn't see that the individual would be selling his or her skills to a number of companies, not just going to an employment agency (there's a winner) and papering the board (as they say in Vegas). No one could see this coming. No one could see the big banks go under and still have a stranglehold on the consumer and business. We could have seen an ineffectual Congress because we've seen one for 150 years. But what Congress even slapped the hands of a bank and told them to stop being usurious, "and we'll give you till next July to stop the practice!"
Sorry, but there's a reason for the tirade against the big banks. If your huge bank - you remember, the one you used to trust and almost trusted you - isn't willing to give you the time of day, start a relationship with a smaller, community bank. And if you already have a relationship with a small bank, go to a senior loan officer (probably just known as "Jim" or "Sharon" or "MD") and ask for advice on getting your service-business or consulting practice off the ground. You might be pleasantly surprised.
You might not, but it doesn't hurt to ask. He, she, it is one more resource.
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All Rights Reserved. Copyright 2010. Ethan A. Winning