Today, if a small business owner goes into their local bank branch, in many instances now, he is treated just like any other customer. Prior to the banking crisis of 2007 and 2008, special “Merchant Only” lines were seen readily available, with tellers and bankers ready to wait on small business owners hand-and-foot. This is rarely the case now. Many banks have reduced their small business services, especially in the realm of small business loans. Obtaining corporate credit used to be as simple as filing a report with Dun & Bradstreet, having a good FICO (credit) score, and having a small bit of collateral on paper. Many times, it was possible to obtain a sizable line of credit (up to $50,000 in many cases) with only a soft credit check and an application. Such financing is rarely available to a business owner, unless they plan on putting their personal residence up as collateral.

All of these consequences are simply confirmation of what has not been reported in the news media – the banking crisis of 2007 and 2008 still looms large today. Economists know what helps an economy grow – the free flow of money through its various sectors. With no capital being added into small businesses by way of the banking system, small business owners are struggling to find alternative ways to fund their companies. This is both burdensome and takes a lot of time away from the business owners to be effectively running and growing their companies.

When business lines of credit were easier to establish, and banks were truly the friend of the entrepreneur, a business owner was able to leverage a small amount in order to invest into larger projects, hire an additional employee, lease the necessary equipment, and many other important purchases. Today, a business owner cannot hire an additional employee if they don’t have the cash readily available. This is one of the reasons that we currently see unemployment in the United States at or above ten percent! Companies are afraid to shell out the money to pay for more employees with no guarantee that they will be able to afford it out-of-pocket.

Currently our banking system is unable to figure out a way to extend funds to small business owners and entrepreneurs who are launching start-ups. The small business is the backbone of the world economy. Until this crisis is resolved, the credit crisis of 2007 and 2008 will continue to play a role as to why the economy continues to stay stagnant in 2012 and until the foreseeable future.

What kind of a business do you want to start? Do you have a written business plan? Do you have benchmarks and goals set in a timely manner? The great Winston Churchill once said that “A failure to plan is a plan to fail.” Before you seek start-up capital, it is highly recommended to have a detailed business plan. There is a variety of software products available to help a budding entrepreneur to put together a business plan, but if on a limited budget simply state a few basics:

1. Your business purpose: What will you do? Who will you serve?
2. Your mission statement: What are your guiding principles? What will drive your company to excellence on a daily basis? What is your end goal?
3. Your Unique Selling Proposition (USP): What makes your company unique from all the others that exist in the marketplace? Why would someone choose to do business with your company? Why would you do it differently?

Once you have these basic ideas on a well-written document, you can use this as your primary business plan to give a big-picture view to any casual observer. Feel free to include your target market, marketing plan, and so-on as you dig deeper into your business. The basics listed above will at least lay a foundation and more importantly cast a vision for anyone you want to include as a potential investor.

Once you have these basics down, seek sources for funding. In an economic climate where investors are hesitant to put their income into a volatile stock market, individuals are seeking to park their funds into small businesses who they can offer money to in the form of a loan, or equity in the company. Banks are not giving out money, regardless of what the rhetoric on Wall Street is currently. It’s increasingly difficult to walk into a bank and ask for a loan of any amount without any collateral. This is where private individuals are the best resource for entrepreneurs.

Begin with your close family and friends by showing them your preliminary business plan. Let everyone know up front of your intentions to seek their investment into your business. Allow them to ask you questions, and most importantly, do not become defensive if some of the questions seem pointed. Understand that entrepreneurs are a rare breed. Most people believe that working as an employee is “safe” and “secure,” even though today’s economic climate has proven otherwise. Be prepared to defend your business plan, and be prepared to justify the investment. Your family and friends are used to speaking to you as just that – a friend or family member – not necessarily a business owner, so prepare yourself beforehand. The more prepared you are, the better off your presentation will come across.

Next, seek investor groups where individuals pool their funds to invest together. One such organization is a website called Prosper.com. At Prosper, individuals can request loans by presenting their proposal, showing their credit scores, current debts, income, and assets. The higher someone’s credit score and income are, the greater their chances of receiving a good loan. Investors then bid on your loan amount, offering varying amounts of money with a certain interest rate attached to it. If enough investors agree to pool their funds, Prosper gives you a lump sum of money with a certain interest rate attached to it. Most loans are 36 month loans, but can also be negotiated to shorter periods.

Another source of financing are grants that your local government, municipality, and country offers for small business owners. Governments want to increase the amount of tax revenue they receive. The most effective way to raise capital for a government next to raising taxes is to encourage business growth. Many countries have agencies that are dedicated to providing resources to small businesses. In the United States, the Small Business Administration, or SBA, offers millions of dollars in grants to small businesses who are starting up or are expanding. Additional information may be found at SBA.gov.

Lastly, marketing online for capital will also find you investors. Almost every city in the world has a Craigslist site, where someone can place a classified advertisement at no cost requesting to meet with investors. Seek similar websites or publications so that you can get in front of potential investors.

When seeking capital for your start-up, it is vital to never quit. Prepare yourself with a solid business plan, and be prepared to answer any question regarding your business. Ultimately investors are not only investing their money into a company – they are investing their capital into you. The better prepared that you are, the better your chances are that someone is willing to open up their pocketbook for you.

During the 1973 oil crisis – an embargo was initiated by the Organization of Petroleum Exporting countries (OPEC) to protest against some of the American trade practices. As a result of this embargo, the price of oil increased by 300%, causing widespread oil shortages and in some cases forcing petrol stations to close.

Experts are warning that a similar crisis may be imminent due to Western countries’ presence in the Middle East causing friction with some of the OPEC member countries. Oil prices have been increased in many areas in an attempt to reduce consumption levels and preserve our natural resources for future generations. However, research has indicated that despite these measures the consumption of oil continues to increase, with an estimated 89 million barrels of oil being used globally every day.

Should a crisis like this hit, the effect on the global economy will be huge – importing materials and goods has become an essential practice for larger organizations, but any increase in oil price would dramatically increase the transportation costs of importing and exporting. As a result, companies would need to either seek cheaper alternatives, or more likely raise the cost of their end products, something which will slow the growth of the economy and prolong the recession.

Travel has become a major source of expenditure for large firms, with employees often flying to business meetings internationally as well as domestically. Budget airlines’ turnover has grown throughout the recession as a result of the increase in business travel. However, any increase in the cost of oil would force these airlines to pass the costs onto their customers in the form of increased air fares. In the event of another oil crisis, businesses which currently have large travel expenses would suddenly find themselves with vastly increased overheads, and have a sudden need to explore cheaper alternatives which may not suit their business plan. Transportation is by far the biggest cause of oil consumption, with this sector estimated to account for more than half of all consumption worldwide, and more than two thirds of consumption within the US.

As well as increased transportation costs, the costs of operating machinery would also increase during an oil crisis, leading to increases in the cost of many essential items, including foodstuffs. As with the rising cost of transportation, any increase in the cost of foodstuffs will most likely result in prolonging the recession.

Experts are unsure when another oil crisis might hit, but most experts agree that a crisis of some sort is likely to occur soon. Whilst the exact effect it will have on the world economy cannot be accurately predicted, there is no doubt that businesses of all sizes will be compelled to adapt very quickly to continue trading.

Currently, there is one major trend that is affecting almost every retail industry, i.e. the increasing trend of shopping online. Studies have shown that over the last few years the amount of money spent through online stores has increased dramatically; the experts predict this trend to continue. Therefore having an online presence is essential for the survival of businesses particularly SMEs.

All businesses, regardless of size or niche, must adapt to the ever changing trends in the marketplace and employ various strategies in order to stay ahead of the competition. Companies must evaluate their products and establish their strengths and unique selling points – the reasons why they stand out from their competitors – and promote these to the potential customers.

There is hardly any industry that has escaped the wrath of recession, therefore it is a good business practice to analyse why competitors went out of business to help prevent your own company from making the same mistake. All too often many companies fail to learn from each other’s mistakes and end up going down the same path. Finding new customers is imperative in order for the SMEs to survive in these difficult times of recession. Most SMEs have been compelled to be more flexible than ever and agree are willing to do business on low margins just to keep their customers loyal.  Any SMEs not willing to be flexible will lose out on their potential customers.

Whilst maximising income is important to the survival of SMEs, the importance of reducing costs is often forgotten. Many smaller businesses have been forced to make difficult decisions regarding staffing costs, including redundancies, whereas regular reviews of all monthly costs could have achieved the same results. Reducing energy costs, for example, has been very popular among larger businesses, with the additional bonus of helping the environment as well as improving the turnover. Many SMEs have also made the decision to reduce their trading hours to save on staffing and energy costs.

The recession has turned the marketplace into a buyer’s paradise and all companies must use every technique possible to increase their turnover and protect the future of their organisation. By acting early and taking small steps, this goal can be achieved with little strain on the daily activities of the company, whereas many SMEs have waited too long and been forced to take drastic and crippling measures in a desperate attempt to stay in business.

What’s happened with Greece? First, the global economic recession beginning in 2009 had an effect on Greek businesses, which reduced revenues to the government’s tax coffers. On top of that, Greece has been carrying a debt load that is at least thirty percent higher than the European average. These two factors create a terrible situation for a country. Massive layoffs, low economic production, and government instability have created turmoil not seen in a developmentally advanced country like Greece in decades. Citizens fear Weimar Republic-like inflation where a wheelbarrow was needed to carry enough currency to purchase a loaf of bread.

Since Greece’s debt is held by foreign countries, a ripple effect has spread to these countries since they now fear that the debt will not be repaid. For a company to default on a debt is normal, for a country to default on debt could be deemed as catastrophic. The European Union has been debating the last couple of months what should be done with Greece’s debt. Germany has been persuaded by other members of the EU to fund a bailout package to help Greece prevent a default, while others are suggesting that Greece undergo a slow, orderly default.

One of the biggest effects when a country defaults on debt is that interest rates rise significantly. In Greece, the interest rate on Greek Two-Year Government Bonds skyrocketed from 1.78% in July of 2009 to over 26% in July of 2011. This means that the market has lost faith in Greece’s ability to repay its debt, meaning that Greece’s spending spree has to be cut to a halt. The problem with this is that such a large number of Greek citizens are dependent upon the government for their well-being. If Greece can no longer borrow the same amount of money, the citizens who depend on this money will be left having to find work in a country where very little jobs are available.

How does this resonate around the world? It’s bringing to light the problem with debt. For years and years, countries have depended on each other to borrow money in order to fund their countries. In the United States, for example, politicians fund their projects by simply borrowing more money – mainly from China. Today, the United States is in a debate as to whether or not to raise the “debt ceiling” which is the self-imposed barrier of borrowing more money. Should the United States Congress not vote to increase the debt ceiling, the country will default on its debts, affecting its credit rating across the world and increasing the cost to borrow money across the board.

Greece, Spain, Portugal, and the United States are four countries who are wrestling with major inflationary and debt fears. Such uncertainty affects all global markets. When countries are struggling with staying afloat, how is a business supposed to have confidence? If a business lacks confidence, it will not hire employees. It will not expand, and it will therefore not generate tax revenues for the country it resides in.

The silver lining in the crisis in Greece is that the EU will work together to find a solution – because there is simply too much at stake to the global economy to let this problem have no resolution.

During a recession, people want to hoard money and resources, as they are afraid of what is being discussed in the news media. Darren Hardy, Publisher of SUCCESS Magazine encourages people to go on a “news diet” where he says “stop watching the news all day!” The news doesn’t report happy things often. What is being reported are all the murders, calamities and disasters that are occurring on a daily basis. The world has always had problems. The only difference between today and a thousand years ago is that today news travels instantly. We always know what is happening in the world, thanks to a 24-hour news cycle and the Internet. It’s vital that entrepreneurs not become bogged down or distracted by the negative news and instead focus on the positive – building a business, creating wealth and opportunities for their community to seize upon.

Right now is a time of difficulty when competitors are “folding up shop” and running away from owning businesses. People are scared. How should an entrepreneur think? An entrepreneur needs to think, “less competition means a great opportunity to seize market share!” Less companies in competition means that another company will fill that need… Why not YOURS?

Wealth is created by finding a need and filling it. When you can fill someone else’s need and fill it well – you will earn. Some of the world’s best companies have been formed during economic downturns. The Great Depression in the United States created more millionaires than any other time in the history of the country. Who became wealthy? Entrepreneurs that sought out opportunities to buy when everyone else wanted to sell. Entrepreneurs who started businesses while everyone else closed their businesses. The world needs entrepreneurs who can lead the world economy into prosperity. It takes faith, innovation, and creativity to think the opposite of the masses. When the masses are scared is the time to ACT.

Entrepreneurship takes some financial risk – and not everyone is able to make such a risk, especially when money may not be in great abundance. This is an opportunity to find groups of investors to help with your venture. You don’t need to find a wealthy angel investor – find a pool of smaller investors. There are people who want to invest in companies; they just need to find the right company! Network on sites such as LinkedIn.com and EmpireAvenue.com to find investment groups in your area. Find influential business leaders who can provide you with advice. Become a master networker, because as you build a support network of investors and fellow entrepreneurs, you will become a resource for others to come to. As others come to YOU for advice, it opens the door for even more opportunities.

One of the first issues that countries in the United States are experiencing is with their exports. When trading from the United States to another country, US companies are finding that their goods are receiving less in exchange for their normal prices. Should a company accept less revenues? Less revenues mean lower profit, which affects the company’s bottom line. This eventually leads to difficult decisions by the company’s board of directors and in today’s economic climate leading to mass layoffs of employees.

One of the countries that has enjoyed the declining dollar value has been China. Deemed as a controversial move in the United States, the Chinese have pegged the Yuan against the value of the United States dollar. As the dollar has declined in value, China has been the most pleased with this – due to the trade imbalance between the two countries. The downside for China is the large amount of debt that it owns in the United States in US Treasury Bonds. As the value of the dollar declines, the notes that China holds also declines.

Many countries are concerned with the falling value of the United States dollar, however not all economists believe that this poses a risk to many nations. According to a former deputy managing director of the IMF (International Monetary Fund), Anne Krueger, she believes that the larger problem facing the United States is its savings rate and aging population. Another factor noted by other economists has been the resilience of other economies in light of the economic problems faced by the United States. As the world’s number one economy, the United States has a figurative target on its back, with China hot on its heels.

One of the effects that the world will continue to examine is whether or not American goods and assets are still attractive due to the decline in value of the United States dollar. As American companies try to sell their goods on the world market, they may try to raise prices to keep profits in line with expectations – but will other countries accept such increases? With other countries being able to match the United States’ technological capabilities and natural resources, it has put the United States on the defense. Countries like China have the capability to manufacture an equal product at a lower cost – putting them at a huge advantage over the United States which has more stringent environmental laws, employee unions with strong demands, mandated minimum wages and a declining currency.

The problem looms worse for the United States than for the entire world. The world economy is resilient and not wholly dependent on the United States anymore. If the United States dollar is no longer the standard, we can very easily be discussing the Yuan or Euro as the world’s standard in a few years time.

Today, GFT Company Ltd no longer needs to buy radio time, nor pay for mass mailing or take out expensive newspaper advertisements. Instead, the company hires a marketing professional to work on building an online presence. This online presence includes a website, connecting on social networking sites, exchanging leads with other companies, Search Engine Optimization (SEO) and Pay-Per-Click (PPC) advertisements.

Instead of GFT Company Ltd paying for advertisements that metaphorically “fall on deaf ears”, they can buy advertisements targeted at exactly the consumer that they want. If there is a particular clothing accessory that would appeal to men aged 25-40 years old, let’s say a certain style of dress shirt – then GFT Company Ltd can pay a search engine or other site to show ads for that specific demographic. Facebook is a marketer’s dream for this very reason. Instead of buying advertisement on a website like ESPN.com to target a large market of men, companies can now advertise on a site like Facebook, Plenty of Fish, MySpace, etc., where the users put in their profile information such as:

• Age
• Marital Status
• Gender
• Location
• Interests/Hobbies
• Favorite Music/Movies/TV Show/Companies

So, if GFT Company Ltd is going to target an advertisement to their demographic of men aged 25-40 years old, located in Mumbai, Tokyo, Los Angeles, New York and Toronto, they have all the resources necessary to do so. Sites that collect this much data from their users are goldmines, since advertising dollars are spent to target customers like a laser beam. Instead of spending money to attract clients only in Mumbai, India – GFT Company Ltd now has an international presence. Overnight the company has now expanded its marketplace worldwide. Geography is no longer a limit. Instead of being concerned with targeting the right demographic in the surrounding city, their number of potential customers has increased exponentially.

What does this mean to your business? It means that every online means for “spreading the word” about your products, services or ideas needs to be utilised. The cost to target your potential customers is miniscule, especially when looking at PPC advertising. The advertiser does not pay unless the customer actually clicks on the ad! How powerful is that? You get to have your advertisements in front of potential customers but only pay for the conversion when they act upon it.

Today, PPC advertising is only the beginning. Social networking sites allow companies to build virtual store fronts. Online directories allow for the exchange of information between businesses and consumers. Blogs and online newspapers strive for content, allowing business owners to have a chance to be perceived as an expert as a guest writer or interview. These opportunities should be seized when made available – their low cost and high exposure pay off great dividends in the long run.

By definition, liquidity is the ability for a company to be able to pay for goods and services with its cash on hand. For years, liquidity was never an issue. Credit markets flowed irresponsibly; any individual or company in need of liquidity simply had to make a request to a financial institution. The problem was that the market was too liquid. Cash was too readily available for individuals as well as businesses to borrow. Loans were extended to those who did not have the proper means to repay them. In fact, as debts became due, these non-creditworthy individuals and businesses took out more credit lines in order to repay their already established credit lines. It was similar to a “house of cards” where one bad move topples the entire structure.

When huge financial institutions such as Lehman Brothers and AIG requested billions of dollars in emergency funds to help save them from collapse, it was a clear sign that this would be no ordinary recession. What was the biggest nightmare to multinational corporations eventually became the harsh reality for millions of households across the country. Investors, hungry for aggressive returns, encouraged lenders to write aggressive mortgage loans to consumers. Consumers in the United States, lacking proper financial education, agreed to the aggressive terms. When the short-term loans with fixed interest rates matured, there was no way to repay their mortgages without taking more credit. With the impending collapse of Lehman Brothers, the lending of money came to a grinding halt. It was not possible to obtain further financing. Every financial institution was highly reluctant to lend out the money that they had; thus causing an unprecedented crisis. Our market was no longer liquid. The global financial markets now faced a legitimate liquidity crisis.

Over the last few years, as the market has worked to recover from these devastating events, it has shown more than ever that simply having credit is not sufficient enough for a country, a company or a household to operate on. Being liquid – the ability to tap assets for cash at a moment’s notice – is of paramount importance. Financial statistics have shown for years that countries like the United States have a negative savings rate, meaning that consumers are spending much more than they bring into their households. With little or no savings, this means that in a catastrophic event a consumer must rely solely on credit.

Real estate markets around the world have experienced the effects of the lack of liquidity. Markets in various cities across the United States are seeing a flood of home foreclosures. This flood of housing inventory has driven home prices to record lows. With lenders afraid to write loans to consumers, the lending guidelines have become so stringent, that even the most qualified borrowers of the past are being denied mortgage loans. The absence of money to lend coupled with a vast quantity of homes to purchase have brought the real estate industry to a slow crawl. With so many industries that rely on the sale of real estate, e.g. construction, services and retail, etc., liquidity has been one of the main focus points to resolve the world’s financial crisis.

Social networking provides a phenomenal opportunity for any company to connect with the consumer on a personal level. Companies of various sizes, from Fortune 500 companies to small & medium enterprises (SMEs), are using varying levels of social networking to communicate with their clients. One of the most helpless feelings as a consumer is when your voice is not heard. The following is a real-life example of the power of social networking, recently witnessed on Facebook.com:

A husband and wife rent a vehicle with a major car rental agency. This car rental agency is worth $12.1 billion, has 68,000 employees and more than 5,700 locations around the world. The couple is charged some fees that were misunderstood, to the tune of around $130.00. They complain at the airport location and speak with a manager who says, “Sorry, we can’t do anything about this.” The husband writes a well-articulated, yet frustrated post on the company’s Facebook page. Within minutes, an assigned customer service representative contacts the husband and wife, gets the Regional Manager involved and all fees are waived.

Is this type of resolution always going to take place? Absolutely not – but this shows a tangible example of the power that lies in social networking from a business perspective. If your customers know that they can have a direct connection with your company, they are more apt to want to do business with you in the first place. We live in a world where we have seen trust betrayed in the highest levels; whether it be governments, CEOs or high profile figures. When you can establish your company as a trustworthy, people-oriented organization, you build rapport and deep connections. These connections make people less likely to go somewhere else, whether or not your competitors are less expensive than you are. Customer loyalty is built on trust.

In order to begin building trust, where should a company start? First off they should ensure that they have an appealing website set up with a reliable host. Next, establish a presence on the major social networking sites:

Facebook.com – Establish a “fan page” for your company

YouTube.com – Use to post up videos related to your company, instruction and promotional information

LinkedIn.com – Establish your company’s home page, and all corporate officers/owner profiles

Twitter.com – Set up a Twitter feed to be in constant communication with customers, prospects as well as to build credibility.

Each of these social networking websites has a different use. The owners of a small business are going to be busy taking care of the day-to-day operations, so it’s important to set aside a small portion of time (15-20 minutes is adequate) on a daily basis to update the Facebook and Twitter feeds, and to stay in contact with customers. There are various free programs available that allow people to update both Facebook and Twitter with a single click of a button, thus removing the necessity to log into both websites separately. This saves time and money – allowing the business owners to focus their time on making money. Social networking takes a commitment but it can pay off huge dividends.