Even though the Great Recession technically ended in 2009, the memory and effects linger to such an extent that it continues to be an issue in the presidential race. One effect that doesn’t get a lot of attention is that American companies are hoarding cash. Reporting earlier this year in the New York Times found that American companies are sitting on $1.9 trillion.
That’s a lot of cabbage.
Explanations range from these companies not wanting to pay American corporate income taxes on some of the money to companies looking to buy other companies to companies saving their money for a rainy day to companies saving their money for the next huge technological advancement.
When you add the large cash pile with historically low interest rates to borrow money, the larger question to me is, why aren’t these companies expanding? From a resources standpoint, companies either have money or have access to money to grow if they want to. They’re all set.
But we as a people have rarely been all set. We as a culture have continued to push forward because we want more, for better or worse. That’s where our entrepreneurial spirit has come into play. If the big guys don’t want to grow, we’ll open small businesses and grow ourselves.
But as with larger companies, entrepreneurial activity has been down lately. There’s talk that millennials, those born between 1980 and 1999, have been so stung by the Great Recession that they are risk-averse and are starting or buying companies at a far lower rate than previous generations. According to a Washington Post article from February 2015, millennials are starting far fewer businesses than baby boomers did at the same age. During Hippo’s entrepreneurial boot camps, few of the participants were under 30. The few we had wanted to start apps. That’s a bit like the kids I talk to in the fifth grade who all want to play pro ball. It’s a good living if you can make it, but the odds are long. You know what business does really well and isn’t a long shot? A plumbing company, or trucking.
This isn’t an issue we need government help on, though regulations could be more thoughtful.
It’s a personal choice to take more control over your life and to risk something for a greater reward.
If the big companies don’t want to continue to grow, the small guys should take advantage of that. And starting a business doesn’t need to be something technological. It could be something as bricks and mortar as a day care center or a lawn care company. There is opportunity on the street.
As a wise man told me recently, “Get off the computer and get onto the street.” Opportunity knocks.