Good news for businesses… in 1 – 3 years

Good news for entrepreneurs (or, at least for people planning to become entrepreneurs in the next 1-3 years).

During periods of economic growth, consumer spending injects cash into the economy, and free-flowing cash is exactly what makes an economy stronger.

Entrepreneurs and economists are concerned right now because people aren’t spending money at levels needed to bolster the economy. According to the Financial Post article “Fed stuck in zero-rate game (Paul Vieira, Sept 20, 2010 — No longer online), “consumers are opting to pay down debt instead of spending on goods”.

It’s one of those things that sounds strange even though it’s true — paying down debt isn’t as good as spending… at least when it comes to economic growth. Instead, consumers are a licking their economic wounds and understandably getting credit histories in order. They’re forgoing purchasing in the short-term to fix their personal credit.

Although entrepreneurs and economists are understandably worried, I think it’s good news — for those with a 1-3 year view. Once people have paid off some debt, they’ll start spending again… And I believe they’ll start spending with exubrance. By the time they start spending again, they’ll have long forgotten why they weren’t spending, AND, they’ll have improved credit ratings and credit limits and buying power.

I believe this is a great time to start a business or deepening the positioning of a current business. If you can survive The Great Debt Payoff, I think you’ll reap some serious rewards down the road.

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