Small Biz Owners

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#1 Thu, Aug 11, 2011 - 6:28pm
Joined: Jul 13, 2011

Small Biz Owners

Would like to start up a discussion with fellow small biz owners about how your preparing for the upcoming economic chaos. I´m a US ex-pat running a physical therapy practice (specialized in neurological rehabilitation) with my wife here in Germany and we have 5 souls earning their bread and butter with us. Been stacking Phyzz for close to 3 years now, mostly silver with a sprinkling of gold to hedge against Weimar Republic II. Slapped 11kw of solar panels on the roof to cover future electricity costs. Everybody is booked solid with work, but like almost everyone else, being paid in fiat. We have built a new facility and have great insulation to keep heating costs low. Chose to avoid oil heat and went for more efficient natural gas, but as with most parts of Germany, we are vulnerable to Russian gas shenanigans. Added additional solar panels to aid with warm water production and boost efficiency. Currently streamlining my insurance polices as well. Bought a small snow plow so we can plow our parking lot ourselves and save more fiat. Perhaps some of you have more ideas or can share what you are doing specific to your line of business.

Edited by: Fockewulf190 on Nov 8, 2014 - 5:06am
Sat, Aug 13, 2011 - 1:42am
Joined: Jun 14, 2011


I own a small tattoo and and piercing company. We manufacture most items that are needed for piercing and tattoos. We use to stock 750k- 1 million dollars worth but have been liquidating slowly for the last 9 months. The way I see it when the SHTF there wont be much need for belly rings and other retail items because people will be more worried about buying food. The bad part about it is that our sales are still good but just don't want to risk losing it all because I have reinvested every penny I have made for the last 6 years into my business. To be honest I dont know when or if we will have 90% of it sold before the time comes but I just dont see the demand for my business in the short term. I also own a self storage but am not selling it because it would not bring enough at the moment with the market the way it is and it is still has a cap rate of about 10%. The way I see it only time will tell and que sera sera. Good luck to you and your family.

Sat, Aug 13, 2011 - 4:47am jackmeoff
Joined: Jun 14, 2011

Business in Brazil's Hyperinflation

This might be helpful. A few months ago, a poster on ZH posted his experience in hyperinflationary Brazil. His was the first "first-hand" account I saw that mentioned what happened from a businesses-owners viewpoint. Granted this is from a large-company's perspective but it still might have some gems. Check it out:


Growing up in hyperinflation in Brazil the only solution was devaluing the currency several times over and over (like a default) and high interest rates, imposing austerity, high unemployment and loss of purchasing power with a lot of turmoil and social unrest of course. The government seized temporarily people's savings on banks (you could not draw more than a certain value) at the same time they devalued the currency. Only people who owned real assets like real estate, US Dollars (the reserve currency at the time) kept outside the banking system (today it would be gold) and companies that were not hindered by hyperinflation or owned other real assets were safe haven, all the rest got screwed. Today there are still lawsuits against the Brazilian government in order to recover the loss of the savings due to inflation at the time. Price controls NEVER worked in holding inflation. Black markets arose, cars were used as a store of value (yes, a depreciating asset is a store of value in a hyperinflationary environment). My uncle made nominally a lot of money by buying cars and selling them later (seriously!). Dollars were the safe currency and parallel exchange rates were used to circumvent government fixed rates. People and companies don't invest long-term in hyperinflationary environments, interest rates are so high that NPV for projects more than a year don't even matter and payback time is the only decision factor…this hinders investment in infrastructure, education and anything that improves the country competitiveness.…..JfVoJENIFw

I remember as well that R&D for companies didn't make sense since there was so much uncertainty. With real interest rates so high, the uncertainty kills of any long term investment…Brazil had to control imports and technology to keep the local industry "competitive", if you imported anything like a computer or car it had a 100% tax import on it…we drove old VW Beetles until the government came to reason and allowed imports and then the auto market actually became very competitive globally

Thanks…I forgot to tell about taxes…taxes were absurdly high in Brazil (they still are…but it used to be worse). High taxes killed SMEs, it killed entrepreneurship and a lot of small business had to be informal to be sustainable. Only large corporations could afford good lawyers, creative accountants and bribe bureaucrats or "lobby" the government (I always find funny what in the US they call lobby in other countries it is called bribe) to circumvent taxes. So what the government did? They kept changing the rules and tax laws to keep taxing large corporations (something that US govt seem to begin to take on as well). This created more uncertainty and hindered even more innovation and entrepreneurship. When I was is college and began taking internships I was always amazed that it made more sense for companies to put their best minds and budget to find ways to pay less taxes than being innovative or competitive. Now I realize from a profit-maximizing perspective it made totally sense. It's funny that at that time business owners were always viewed as crooks and "savage" capitalists, because that was the only way to survive in that environment, companies had to dodge taxes to be economically viable and since the law system in Brazil was so slow, it was better to dodge taxes and later on pay any infraction if you were ever caught. In that sense, I believe this created a culture that being a businessman = crook that only now is fading away.

I remember they had price controls, specially on food, but it wouldn't work, if merchants were obliged to have certain item at a determined price, they wouldn't have the product (since it was negative profit), it would disappear from shelves instantly or there would be parallel markets where they people would transact at the "real" price of commodity. With all the price signaling messed up, you would have temporary shortages of basic items like toilet paper and others. One of the consequences of price controls and hyperinflation would be that people would stock up in their basic necessities, to guarantee their "demand". Also, you would tend to buy in bulk and spend all your money as soon as you got your paycheck in order to buy at "cheaper" prices before they would raised overnight (one of the most profitable market at the time was to produce price tickets machine and supermarkets had a lot of people whose main job was to mark-up prices daily) I remember that you would try to take off the new price if there was the old price and try to buy it at the old price…there was no electronic control at the time (80's and beginning 90's). So by having to stock up and spend you paycheck ASAP there were of course no savings whatsoever and therefore no credit (we didn't have China lending us at cheap rates). All transactions like real estate, vehicles would be mainly by barter and/or using US dollars

I don't remember if there were rent controls, but I guess it would probably be ineffective as well, it would only make the market go informal and become only private-to-private transactions. They had on banks what they called "overnight" which would basically give you an return rate that followed close to the US Dollar. People would also buy jewelry and gold, but mainly as a saving vehicle, not so much to barter. Everyone also kept US dollars (literally under the mattress) at home until recently (so basically we sold our goods to the US and lent you at a negative real interest rate by keeping US dollars indefinitely as a saving). Whenever we traveled to Uruguay/Argentina, they wouldn't take our currency, we had to use US dollars or their local currency. Today at Uruguay they prefer if we pay in Brazilian Reals and will give a nice exchange rate and discount if you pay in cash.

I guess in USD at the time everything was a bargain, either Brazilian stocks or Real Estate, but you would had to have to hold it from the 80-90 until the beginning of the 2000's to make a killing when Fernando Henrique Cardoso (the best president Brazil ever had, he did all the austerity and tough unpopular decisions while Lula collected the dividends) solved by creating a new pegged currency, migrating slowly to semi "free-float".

Sat, Aug 13, 2011 - 5:27am
Joined: Jun 22, 2011

@ Jappleseed911.

Thank You.