Steps to Economic Recovery

During the run-up and collapse of the real estate market, economic growth was fueled by debt financing.  The personal sector was largely flat except for the growth provided by equity financing options such as 2nd mortgages and refi's.  Many families survived by turning to consumer debt.  After the collapse of the real estate market many individuals are deeply in debt.  To fund the economic growth, we can no longer look to the individual.

Things on the Corporate side are not much better.  During the economic run-up, most corporations leveraged their growth through easy and readily available credit.  As the economy collapsed, many Corporations were devastated and are barely making it because they're carrying debt that was negotiated in better economic times.


Where Recovery Must Start

Growth and economic recovery must come from new corporations and entrepreneurship.  Most older companies are too heavily leveraged to start the economic recovery.  We need new businesses, that are positioned to take advantage of current economic conditions; not corporations that were positioned to take advantage of an economy that existed 5 years ago.  As new businesses begin the recovery and we get some more value in the market, it's likely that the economy will recover to the point where existing corporations will be saved and equity will return to the real estate market.



Steps to recovery

1.) Start New Businesses.
New businesses can be formed to take advantage of the currently existing economic conditions.  This will stimulate growth in the economy.

2.) Look for Collaboration Opportuinities
Look for new collaborative partnerships that can create new products and add value to customers.  These can be very good for the economy.

3.) Re-Negotiate Debt
When possible re-negotiate debt.  Too many companies are strapped with loans that were negotiated in a better economy.  Rather than walk away from debt, do your best to re-negotiate the terms of the loan.

4.) Spin-Off New Ventures
Look for portions of old companies that can be spun off.  Try to create new, viable enterprises that are poised to thrive and grow in this economy.

5.) Hunker Down and Survive
This recession is not permanent.  Position yourself to survive until recovery comes and things turn around in your industry.

John Wheeler
http://www.controllersadvice.com/