Advice from a job creator: Bring on the optimism, Obama
This CEO of a small business says the most important thing Obama can do is break the cycle of fear with a message of optimism. Fear works on businesses like winter. They freeze hiring.
Ann Arbor, Mich.
The hottest topic of the 2012 election season is “jobs in large enough numbers to change our economic fortunes.” News commentators, politicians, and authors are all weighing in.Skip to next paragraph
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But these people don’t directly create jobs. As the chief executive of a small business, I do. Small business is where most jobs originate in America, and from my position as an entrepreneur and head of a software design company, I’d like to offer this view:
The biggest need now is a national vision and sense of optimism, articulated at the top by the president. Millions of other small-business executives share my view about optimism’s role. That’s because we are familiar with the “fear versus optimism” cycle that affects every business decision, especially hiring.
This cycle not only influences my actions, but perhaps more important, the spending by my customers. Major events like 9/11 and stock market crashes create near universal fear. Spending slows, revenues drop, hiring stops.
When fear rules, we don’t hire
The fear-driven years of 2008 and 2009 were two of the worst in memory. I watched as many customers simply delayed spending. Potential projects were put on hold as my clients waited for their executives to give the go-ahead to issue a purchase order. Some clients were persuaded by discounts; most were not.
Since we launched Menlo Innovations in 2001, we have lived through several “fear driven” cycles – from the bursting of the Internet bubble to the General Motors and Chrysler bankruptcies to the more nebulous threat of terrorism.
We weathered them by creating a salary structure that varies as our fortunes ebb and flow. Salaries are our biggest cost, and flexibility has allowed us to be profitable every year. When times are good, cash flows to all. When times are bad, everyone feels the pain. The good news: We have not had a layoff in our 10-year history. The bad news: When fear rules, we do not hire.
I finally saw optimism break through at the start of the second quarter of 2011. GM had emerged from bankruptcy and was again profitable. The stock market returned to earlier heights. The cash that corporations had been holding (again, fear kept them from investing) started to flow and our business customers called with major software projects.
Within weeks, Menlo Innovations hired several new employees and increased interviewing in anticipation of even more hiring.
Then something unexpected happened. The US government began to manufacture and export major fear through endless, clashing talks about raising the debt ceiling. The “solution” was delivered at the last minute, and it was half-baked. The stock market became schizophrenic. Who was in charge of the fear/optimism cycle? You couldn’t tell. Indecision reared again in the minds of customers.
Washington, meanwhile, is only fanning the fear flames. The blunt tool of economic stimulus through major deficit spending feeds anxiety, especially among those who try to run responsible businesses and provide financial security for our employees and ourselves. We know that ultimately, an economic system that uses deficit spending to pay off debt is unsustainable and this produces a towering anxiety even when we are optimistic. Anxiety doubles when gigantic “solutions” are agreed on at the last second before calamity could strike.