Debt Free

Well, with the Fed's dropping the Fed Funds Rate by a rather large .75 point this morning, it's the next best thing to free money. That rate is the lowest funds rate we've seen since Methuselah was a small child. The fed actually thought the economic fears regarding our economy merited such an extreme measure. Stock futures are pointing to a probable precipitous drop in the market today, on the heels of many down days on Wall Street over the previous few weeks. Inflation fears notwithstanding, this rate cut may give those who aren't relying on their portfolio something to cheer about. For many investors this has been a rough time. Will the Fed's version of free money help?

Overseas markets, after experiencing some dramatic gains over the last few years, are showing signs they may be succumbing to something akin to rampant panic about the future of the U.S. economy. The major markets in Germany, Brazil, and India all fell by more than 6%, and the Hong Kong exchange dropped by 5-1/2%.

Where does this market drop, coupled with record energy costs, and a shaken credit market, leave you, the investor, business owner or employee, who's wondering what the future will bring? Funny, that's who the whole thing depends on. The entire economy is a veritable house of cards, built on the backs of consumer and investor confidence. If investors and consumers get sweaty palms and stop pouring money into the whole thing, it's just like a fireman on a train neglecting to shovel coal into a hungry boiler. The train will inevitably slow. If that happens as the train is on an uphill climb, that slowdown will occur more rapidly.

What can you do to ensure that your economic future is isolated from the world wide jitters to the greatest extent possible? Nothing you do can completely ensure that you'll be free from a chance of a bit of economic doom and gloom, but in every market, no matter how dire, there lies opportunity. Your job is to find that light in a dark economic tunnel.

Where to look? Well, you have a few choices. The demand for some things will never slow as much as the demand for others, no matter the extent of economic downturn. Such products have a relatively inelastic demand, meaning that the quantity demanded of these products or services is relatively less price sensitive than others. The price can drop and demand will not go up all that much, but then neither will it decline when prices go up.

Still other products and services are actually in greater demand when the economy slows down. You have yet another group of products that experience a quantity demanded that rises with the population, and the world wide population continues to rise, as it has since the beginning of time. Finally, with the Fed's rate cut, there will be a supply of relatively cheap money. If that does not cause a significant rise in inflation, cheap money will grease the economic skids and cause even more opportunities to open up. All these factors will converge to bolster and or insulate the markets for certain products and services, such as those that provide for basic needs, or help others ride out tough economic times.

As a business owner, employee or investor you must investigate what opportunities are opened by these conditions. For the business owner it means some markets will open to you, even as others slow down. If you can provide those things that can help others compete when their market gets tougher, that is one such opportunity. Look into the future now, before your business experiences a major downturn, find those markets and take advantage of them, while the opportunity exists. For you as a business owner, any products or services that help other businesses differentiate themselves from their competition will be in demand, as other business owners fear their market share is slipping away or slowing sales is cutting into their revenue. If you have a business that caters to the end user, look to any product or service that can help the consumer ride out tough economic times.

The important thing for both of these kind of opportunities is that you act now. You must position yourself to take advantage of them so you are the one who your customers look to as a solution in their time of need. That will help ensure it's not a time of need for you as well. A bit of planning now will help you to escape a plunge in your business.

If you are an employee, the time is now to ensure you are the most valuable employee in your organization. Sadly, if you work in some union shops, your value may not matter, as any layoffs will be done strictly on a seniority basis. For others, now is the time to buckle down, as your value to your employer will have a direct effect on two things; your likelihood of retain your job if the need arises for your employer to respond to a declining market, and the ultimate success of your organization in such a market. If you are positioned well in both of these areas, you stand the best chance of not only riding out a storm, but possibly rising to the top during the bad weather.

Take any extra training you can during this time to increase the value to your employer. Do special projects that can bring your employer extra market share or revenue. Find new and innovative ways to cut costs that will directly impact your employer's bottom line. All such moves can not only help your employer ride out any tough economic times, but help ensure you a key place in that organization for a long time to come. This may also be a great time to consider a side business to help bolster your personal revenue, if such opportunities exist (and they usually do). Just ensure that you can do this without impacting your job performance, as now is hardly the time to be perceived by your employer as withholding effort.