Did you know that global trends can directly affect owners of small, woman- and minority-owned businesses? In some instances, M/WBEs feel that global trends and cycles do not directly affect them; that they are somehow immune to the effects of circumstances playing out internationally. However, that is not the case—especially when smaller companies are seeking opportunities to grow by supplying products and services to multinational corporations.
Last month, a major topic of political and economic discussion was “Brexit,” also known as the exit of Britain from the European Union. The upheaval and confusion caused by incorrect polling data, misguided predictions, and ill-informed projections led to massive losses of wealth in the markets and confusion across the board. In addition, the instability of the region generated anxiety for investors, corporations, politicians, and entrepreneurs of companies both large and small.
After the Brexit results were announced, during an interview on CNBC on Friday, June 24, former U.S. Federal Reserve Chairman Alan Greenspan was asked if he expected a domestic recession. He said he is simply expecting a long period of stagnation — one of the more troubling periods he's ever seen.
Greenspan envisions companies being unsure about the future, and therefore reluctant to invest in their future. The result: sluggish growth. He added, however, that apart from the Brexit vote or European turmoil, the global economy — including the U.S. — already has been weak. He noted the stagnant pay among U.S. workers. According to Greenspan, the latest events just add strain to a sluggish global economy.
In the wake of Brexit, here in the U.S., there was concern about the value of the dollar and the effects of trade with the United Kingdom and European nations. In essence, we watched and learned that, metaphorically speaking, when a world superpower sneezes, the rest of the world catches a cold. The upside has been that most of the financial losses realized in the stock market were recovered within one week, offering a level of comfort and glimmers of hope for those in the game and for those watching from the sidelines.
Generally speaking, here are some of the takeaways from the Brexit narrative that may be relevant to small businesses here:
- Global uncertainty and fear of recession may keep interest rates down to encourage investment and spending, therefore businesses could see current low interest rates stay in place for the near future. Lower interest rates present prime opportunities for companies to be aggressive with their growth strategy
- U.S. corporations that have significant operations in Europe my experience a slowdown in sales due to the strong U.S. dollar and European uncertainty, causing a slowdown in domestic spending. Business owners who are monitoring these projections can adjust their budgets and inventory as needed in advance.
- U.S. stock prices may show instability or decline due to the uncertainty of the European market, therefore investment portfolios may temporarily lose value. Savvy investors will see this as an opportunity to expand their portfolios and grow wealth in anticipation of the markets rebounding.
- A strong U.S. dollar and weak European currency could make the purchase of European-made products cheaper, so importing goods at lower costs will be advantageous to companies doing business internationally.
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