MAKING BUSINESS DECISIONS IN TODAY'S WORLD

摘要

Making business decisions in today's world is much more difficult than it was just a dozen years ago. Since the Great Recession-which lasted from December 2007 to June 2009-figuring out what to do in long-term planning for your business has been extremely difficult. Case in point: I recently had an inquiry by a young drilling contractor on whether he should buy a good used rig or fix up his old drill rig. It's not an easy decision, but more on that later. First, some thoughts on today's business world. In our country's free market system, it was typical during the 20th century for there to be business cycles with times of prosperity and times of sluggishness. Slow times often recovered, and a new run of good times followed. Most of the slow times lasted only a few years. While many say the business cycles haven't changed much in the 21st century, the reality is there has been a great deal of uncertainty since the Great Recession. The fact interest rates are significantly lower compared to the last half of the 20th century is, in my opinion, a huge red flag. Interest rates are unrealistically low, and I think the Federal Reserve, which regulates interest rates, is keeping them there to prop up the business environment. Ideally, when the business environment is doing well, interest rates return to normal. But interest rates haven't been normal for more than 10 years. Many small drilling and pump contractors cater to the new home market as well as homeowners who own a second summer home. Others cater to the farm and ranch market. The new home market has fallen significantly in the last six months and sales of existing homes has also fallen.