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How the Presidential Election Affects Your Business 

“Donald Trump is a philosophically unmoored political opportunist who would trash the broad conservative ideological consensus within the GOP…”

“Hillary Clinton should be in jail because she is crooked, and our nation will suffer from her corruption…”

It’s election season and the Presidential race is a hot topic. Some might say that this election is one of the most memorable elections in history. However, both the Republican and Democratic candidates have gained somewhat of an infamous reputation… and both candidates have a hand in why the presidential election affects your business.

How will our country fare in such a controversial time? More specifically, what will happen to our economy, our businesses?

Animosity in the Workplace

Presidential election season often puts people in the mood for a good debate. When Donald Trump and Hillary Clinton were announced to be the Republican and Democratic Candidates,  things really got interesting.

Animosity between followers of the two parties have clashed like never before. Stealing signs, protesting, creating hate-filled hashtags, and more. Over the past several months, we’ve also seen the presidential election create a financial dent in companies in various capacities.

Can political talk within the workplace cost you your career?

“So… who are you voting for?” This is the question that sparks many an argument.

Long gone it seems is the notion to not talk about religion or politics in the workplace. Tensions are high, and it’s becoming harder to focus at work with the end in sight. Many businesses across the United States are experiencing HR conflicts due to the election – one example of how the presidential election affects your business.

For example, Sarah, an editor of a cooking magazine, decided to hang a “Vote for Hillary!” poster outside of her door. As a result, she was placed on disciplinary probation and was sent home.

Sarah is not alone in the matter. In a recent article, the NY Times reported about how bringing political issues into the workplace is costing jobs. High employee turnover during election season is causing more instability in addition to the uncertainty caused by the elections.

Freedom of speech?

While it may seem like employee discrimination, a private company can act freely in their hiring and firing decisions. Particularly businesses in Texas (a right to hire/right to fire state), employees are not necessarily free to express any opinion and keep their job safe. The only safety net is in keeping your mouth shut.

This issue can only be mitigated by state employee protections. The problem is that so few states protect employees from discrimination for political speech or opinion (only California, New York, and Washington D.C. protect an employee specifically from political activity or affiliation). Private employers make up about 85% of the workforce, and offer little to no protection from being fired due to political views.

Unless your company is all about letting the people freely speak, try to keep the political discussion to a minimum. Instead, create a safe environment a healthy dialogue about how either candidate will impact the company with new policies, guidelines, laws, economic fluctuations, stock market increases/decreases, and business confidence. Use an external analysis as a guideline to create an awareness of potential changes expected as well as a plan to react to said changes.

Other issues within the workplace

I’ve never seen a customer ask an employee about his or her political views, let alone reject their business because of it. The same goes for the business, and their “right to refuse service.” With the issues arising between people, and not just the employees, it seems harder to make a sale.

For example, let’s say you needed to buy a shovel. You make it to the local hardware store, but there’s a “Vote for Trump” sign in the window. Would you give them business? I bet you would if you were pro-Trump. But what if you weren’t?

This isn’t assuming that customers are discriminatory (for the most part). The idea of “voting with your dollars” has never been more in evidence. Consumer spending is less optimistic than before, but like most downturns, there are indicators for a stronger economy within the next six months.

Presidential Election Affects Your Business

The Washington Post recently quoted the chief economist at the National Federation of Independent Business, Bill Dunkelberg: “Uncertainty is high, expectations for better business conditions are low, and future business investments look weak… Our data indicates that there is little hope for a surge in the small business sector anytime soon.”

Check out a blog we wrote this summer about how uncertainty surrounds events like the elections.

Market & Financial Impact

Money Magazine recently published quotes from Mark Cuban and Marc Faber saying, “Stocks will plunge if Donald Trump is elected President. And the bond market could capsize if Trump goes ahead with plans to renegotiate the national debt. Yeah, but if Hillary Clinton wins the White House, she’ll cripple the economy by hiking taxes by $1 trillion.”

There are good and bad consequences to either candidate being elected. As you are evaluating who to vote for or preparing for the impending announcement of our next President, start by ranking the importance and level of impact a particular stance has on your company.
Look at stock markets, debt, foreign policy, immigration, taxes, etc.

Bottom line: vote.

Want to know how to make decisions easier for your company? Download our External Analysis whitepaper to take control of your business during this unpredictable time!

Conducting an External Analysis

Regardless of the animosity and drastic differences of the two parties, we have to remember that either way, someone is going to change the economy. As a result of the presidential election alone, the economy has experienced a slight downturn. Imagine how the selection of a new president will change the future of your business.

According to Wall Street Journal, certain businesses are holding off on million-dollar construction projects until after November 2016. Compared to the previous year, predictions were much more optimistic. New tax regulations, health codes, and other economic policies are examples of external forces directly associated with the presidential election.

The Future with Clinton

When we make projections for a company, we look at the previous years’ financials. In this case, we’ll look at Hillary Clinton’s previous actions to predict the future of our country… with her role as the secretary of state. Clinton was involved with three scandals – emails, Benghazi, and the Clinton Fund.  Will American citizens look harshly on this?

From an economic standpoint, Clinton plans to cut taxes for the middle-class, raise the minimum wage, and other actions related to equality and creating jobs. There is a cost associated with these plans and you must evaluate how your business will be affected.

The Future with Trump

What do Donald Trump’s previous actions say about him?  He has been involved with multiple scandals related to racism, sexism, and violence. How will this affect his ability to lead our country?

From an economic perspective, Trump wants to regulate tax codes in order to grow manufacturing within the United States. His controversial idea to build a wall between the US and Mexico will almost certainly impact trade with our neighbor to the south.  How will these measures affect your company?

Conclusion

Rather than spending time debating your co-workers over the merits of this candidate or that one, really dig into what each candidate’s plans will mean for your company. Take the time to vote.  Don’t take your eye off the ball because of November 8th,  but instead look ahead for what’s to come on November 9th.

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The Trump Effect | Part 1 Business Confidence & Uncertainty in Elections

Business confidence is low. Uncertainty is high. Candidates are spewing whatever words they think will win that one last vote. Challengers have dropped out left and right, leaving us with 3 major contenders.

business confidence presidential elections

Make America Great Again. | Hillary for America. | A Future to Believe In.

Now what?

business confidence presidential electionsPresidential elections bring all kinds of uncertainty. Voters are choosing from candidates that have opposite policies with little to no middle ground. Businesses aren’t sure what to invest in and when the oil crisis will end. Economists are unsure of where the economy is going.

Business confidence: an economic indicator that measures optimism and pessimism that business managers feel about the outcome of a company.

Uncertainty: state where there is no objective nor are any outcomes or alternatives known.

Talking is one thing, whereas acting could result in something entirely different. If Sanders is preaching for free college, we have to assess how those words are going to work when they are acted upon. Whereas if Trump is pushing for the wall, we have to acknowledge that there is a lot more work that goes into building a wall than words can speak. If Clinton wants to have 33% of all energy sources come from renewable energy by 2020, we have to factor in the feasibility of accomplishing the goal in that time frame.

Talk is just talk. And there’s a lot of talk going on with presidential campaigns! This causes both economists and businesses to be uncertain about what to expect. When you have three strong candidates campaigning in the United States presidential elections, it can be so easy to focus in on the differences (which are many).

Economists Are Stumbling

business confidence presidential elections

Election Angst Hurting US Economy http://www.cnbc.com/2016/06/03/election-angst-hurting-us-economy.html

Economist reckon that because of the vast differences of the candidates, we are about to see the most uncertain election in decades.

If you were to compare Trump and Sanders, it’s rather difficult to draw a direct comparison. Because of their different beliefs, economists have been forced to adjust their economic forecasts. For example, Trump is focusing on enhancing immigration laws whereas Sanders is emphasizing the need to adjust the tax code. Because of these different focuses, economists aren’t sure what to do causing severe uncertainty.

Elections Impacting Businesses

There are several macroeconomic issues that businesses witness during presidential elections: stock market volatility, currency value fluctuations, decrease in business confidence, and increase in uncertainty.

Disclaimer: We acknowledge the possibility that the economy has affected the election process (rather than elections impacting the economy). The issue of elections and business confidence is too complex to make any one assumption.

Stock Market Volatility

As the stock market becomes more volatile, investors become more anxious about making a bad investment and more conscious about making any investments at all. This results in a dip or potentially a collapse in the stock market.

According to Forbes, the Dow Jones Industrial Average is typically higher during the pre-election year out of the 4-year cycle between each election. BUT when a new president is elected, as in the case of 2016, the stock market is at its lowest of the 4 year cycle. Think of Bush in ’89, Bush in ’01, and Obama in ’09.

Value of Currency

The value of currency adjusts as a response to the change in interest rates. Each party (Republican or Democrat) has an influence on the value the US Dollar (USD). Different economic and political policies enacted by the President, among other external economic or international governmental factors, either increase or decrease the value of a dollar.

Over the past 30 years, we’ve seen inflation rates fluctuate so severely due to political elections that entire countries or regions find themselves in economic distress, a debt crisis, restricted resources, and terrible conditions for those living in the countries.

Especially during the months leading up the election and those following after the election, expect changes in value of currency.

Changes in value of currency do occur in other times than change of political command.

Business Confidence

Thomas Costerg, Senior Economist of the Standard Chartered, said that “the issue is that many candidates are ‘talking down’ the economy, affecting confidence.”

AICPA_web-logo_1C_PMS293_rThe American Institute of CPAs puts out a quarterly report that surveys businesses, CPAs, and the economy.  The 2nd Quarter of 2016 Report was released recently and showed surprising results. While this report does not compare the economy/businesses to the election period, AICPA found that optimism improved from 28% to 37% in Q2 and pessimism from 34% to 21%. Inflation is becoming more of a concern now as we progress closer to election day.

(Are you confident about your company’s unit economics? If not, download our free guide, Know Your Economics, to calculate your economics.)

Uncertainty

logo-2As an entrepreneur, I am part of many business organizations including the Turnaround Management Association. Financial advisors, credit advisors, bankruptcy attorneys, business owners, CFOs, and many others comprise this organization. At a recent meeting, the topic under discussion was how long we can expect the oil crisis to continue. Very quickly, the conversation turned towards the election currently taking place in the United States. The following ideas were raised during this conversation:

The oil crisis all depends on who wins… Who is elected as the president of the United States determines whether the oil crisis will continue beyond 2017 or will taper off mid-2017. 

Business aren’t sure what to do right now because that could all change come November 8th.

 Everything could change. Nobody really knows what to expect from any of the candidates at this point. 

Consumers and businesses are wary about investing and spending during this time of uncertainty. In addition, new tax codes, economic policies, health insurance regulations, etc face businesses. Even adjustments to the Federal Income Tax (FIT) impacts the sustainable growth rate of a business. There is a lot of uncertainty that business owners and financial leaders face.

SWOT Analysis

These issues could have severe consequences for some companies. See these as threats. This is why during a SWOT Analysis, you complete a PEST Analysis where the first letter of the acronym is P for political.

Because of this uncertainty, bankers and economists find that companies avoid hiring or investing in large projects during the second half of an election year due to the sheer unpredictability of the situation.

Arleen R. Thomas, CPA, CGMA, American Institute of CPAs (AICPA) senior vice president for management accounting and global markets, concluded after the first quarter poll hosted by the AICPA that “company executives are clearly monitoring the potential business impact of the presidential election. But overall economic conditions and challenges for their particular industries are weighing more heavily in their calculations right now…” Additionally, Thomas claimed that more weight being placed elsewhere is “likely why [they’re] seeing little election-cycle impact on such key categories as hiring or capital spending.”

During this uncertain time, it’s useful to find economic indicators that impact your business.

What does all this mean?

Typically, we find that business owners or financial leaders stick their head in the sand during times of uncertainty. Remove your head from the sand. Know that this is happening. And prepare for anything. It will be okay. This too shall pass. business confidence presidential elections

What can you do now?

First things first… Make sure that before you analyze external factors that could impact your company, you know the basics of your company. More specifically, know your unit economics. This is one simple step that you can do to ensure that you, your management, and your company know where you stand.

If your economics are out of whack, then regardless of who gets elected, your business will suffer. If you’ve checked that your economics are sound and you’re still finding issues, you might have a company that is in trouble. This could be an issue with internal factors.

If your company is still bleeding, then check out next week’s blog for the Trump Effect | Part 2.

To help you deal with this uncertainty, we want to give you a free guide, Know Your Economics, that will help you analyze the building blocks of profitability in your company. By knowing your economics, you’ll be better equipped to project the future more accurately and deal with the economic uncertainty to come.

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