Friday, August 17, 2007

Business News

Do you pay attention to the business news? I am not talking about subscribing to the Wall Street Journal or Business Week. I am talking about being aware of what is happening in the broader world of business. If you don't, you may want to rethink that.

Why?

Well, let's take a look at recent news. Recalls of products from China. Pet food. Toothpaste. Kids toys. This last one may be the most essential. Kids toys with magnets that can perforate the intestines if ingested, and toys with lead paint. The average parent is now going to be noticing where a product is made. It will start to matter more than the price. I recently bought a treat for my dog, and noticed it was made in China. The treat waited several days before she got it. I had to check on line to make sure it was safe. Where something is made may start to be important to people again.

This may help stem some of the tide of low priced imports. Or at least bring the prices up a bit as manufacturers in China must change their practices if they want to continue to serve this market. But, if the flow of goods from China sharply drops, it may also send ripples throughout the world. China has invested in US businesses, and other businesses around the world. A severe pull back will have an impact on our economy.

Along those lines, look at the impact on the stock markets around the world because of lending practices here in the United States. Leading mortgage lenders are facing possible banckruptcy. They were lending money to people without adequately checking the person's ability to pay back that loan. Now as the real estate market plummets, people cannot unload that house and move on. Foreclosures are causing money supplies to tighten up. Overseas investors are pulling their money out of the U.S. market.....

Okay, enough with the business jargon....Why should you care?

Because the primary market for craft in the last few years has been the well heeled. What if they start feeling the pinch? The stock market has plunged in the last few years. People can no longer use the equity in their house as an ATM. Craft is truly a non-essential purchase. If you think things have been tough in the last five or six years, it may get worse, if the current trends continue.

The Federal Reserve stepped in today to lower the cost of money, at least temporarily. That will help. But it is important to know what the economic atmosphere is right now. We are entering the time of year when most of us do the majority of our sales in a year. What if the bottom falls out of the economy? Have you stretched yourself too thin?

All this may pass. But, it points out we don't operate in a bubble. We need to see what is going on in the broader world. How more and more people shop on line. How the distribution of wealth has shifted. What is the price of gasoline this week? We need to take in this information. It can impact our businesses. We are running a business after all. We would expect someone who is running any other business to pay attention to these issues. Why would artists/entrepreneurs be any different?

You don't need to be pouring over the business section in the newspaper, ready to quote the latest DJIA at a moments notice. But you should know what the trends are. Keep your antenna out there. It matters.

3 comments:

catherien said...

In every business there is a need to watch trends, not only within the niche we place ourselves, but also within the general industry worldwide.

Alot of what I'm seeing is irresponsible behavior by people - borrowing too much credit, not being satisfied with what we have that already works. If our attitudes were to change as a nation, we may find ourselves having more money to spend on art to brighten our lives.

Cat

Judy said...

Thank you for your comments Cat. I agree with you. I might add that it was also the irresponsibility of companies that were too quick to lend the money to people who really did not qualify for the credit they received. It is harder for people to overspend when money is not so freely available.

EC (Lisa) Stewart said...

Judy-

At the same time, the credit agencies are underwriting contracts aiming directly at those who would not otherwise qualify -leading them straight into an insufferable abyss. That's simply unethical.

Meanwhile, the impoverished and blue collar continue to buy from boxes like WalMart simply because it's a one-stop shop that's within their budget. It's quite unfortunate that to stop and think where things are made is becoming an unaffordable 'luxury' for the lower class.

Lastly, I don't believe it's China's issue on whether they're including lead paint and other toxins into our food & products; it's our job to police that *before* it comes into our country. However, in order to force China to our standards, it's going to increase the unit cost of goods, thereby increasing retail pricing -even for WalMart.

Crazy, huh? My head just spins.