Howe's Bayou Brad Howe's monthly guide to navigating the swamps of small business financial management December 2008 Good morning! Budgeting for an economic downturn is a new experience for many small company managers. What last year might have been the worst-case scenario could be this year's starting point. In the current economic environment, budgeting by most smaller firms for 2009 is about calmly resetting expectations, thoroughly playing out the implications, and confidently ignoring those who claim that the sky is falling. Best regards, Bradlee T. Howe Financial Managers Trust The Sky Is Not Falling It's a different ball game in Dubai. When I was there just a year ago, the sky was the limit and, in fact, most new buildings seemed to be going in that direction. "Build it and they will come," was the byword.Not so, this year. Once again visiting my son Chuck, I was struck last week by the empty shells: twenty newly-completed high-end (purchase price $800–1,200/s.f.) high-rise (25–35 floors) residences in Jumeirah Beach which, as indicated by the number of lighted windows in the evening, were certainly less than 20% occupied. Along the famous "Palm," the man- made peninsula for high-end living, the pace of construction has slowed. Though most of the $300 billion in property projects in the Emirate are still under development, there is a distinct Las Vegas "feel" to the place — the Monument to Excess is beginning to prove excessive. Dubai lacks significant oil resources: its total governmental revenues were just $5.4 billion in 2006. Though it is the trading center of the U.A.E. — indeed, of the Middle East — Dubai is now said to be negotiating with its fellow (oil-rich) emirate, Abu Dhabi, for bail-out capital. The decision has been made to delay the second Palm and scratch the third. The Burj Dubai has passed 160 stories en route to 200+ but with annual office rents (rent!!) in the Tower reportedly pegged at $4,000/s.f., the business world will not beat a path to their elevators. You read it here first — with oil hovering at $60/bbl., the falcons will soon be coming home with empty talons for the Dubai Emiratis. But it's still a great place to visit, even if their financial strategy is out of control! Not so, my small company clients, whose 2009 financial strategies are in every case (knock on wood) under control. Here are a few of the things we've been talking about this week as we consider budgeting for 2009:
Alligator Bites Howe's Bayou is not a travel guide, but given that the following appeared in the Financial Times (of London) just a day after we drove past the Atlantis Hotel at the tip (top?) of the Palm last Friday night (and given that I'm still jet-lagged), I'm excusing its inclusion as an example of a contemporary Dubai "monument":"It opened as recently as late September; it is built at the end of the first (and so far only completed) Dubai Palm, a piece of reclaimed land designed to resemble a palm tree; it has more than 1,500 rooms… "…it has a mammoth aquarium built into the centre of its east wing. Add to that the fact that the weather in Dubai rarely disappoints [if you don't mind sauna-like conditions from June through September], and you can see why their presidential suite has been booked solid since opening. "Stretching over three floors, the Neptune Suite welcomes guests with a grand foyer leading down a sweeping staircase into an elegant aquatic-themed dining and living area, with butler's pantry. Then, of course, there are the sumptuous bed and bathrooms with their underwater views. If guests are unable to tear themselves away from watching the 65,000 marine animals, a 24-hour dedicated private butler is available to serve refreshments…" A bargain at $15,000/night. Draining the Swamp "The FDIC today announced that it has extended the opt-out deadline for participation in its Temporary Liquidity Guarantee Program to December 5, 2008. Any eligible entity [e.g. bank] that opts out of the program on or before December 5, 2008 will not pay any assessment under the Program.""Unlimited deposit insurance coverage is available through December 31, 2009 for non-interest bearing transaction accounts at institutions participating in the Program."
— from the FDIC website
If your bank participates, all funds in non-interest bearing deposit accounts (i.e., most corporate operating accounts) are guaranteed through 2009. For your peace of mind, it may be worth knowing whether or not your bank is participating and your funds are protected. About Us Financial Managers helps the managers of smaller companies and non-profit organizations develop reliable financial information for operational decisions.On an affordable retainer basis, FM serves as the part-time controller and senior financial manager for multiple clients, leading them to profitability and positive cash flow. The goal is for the organization to outgrow Financial Managers' services, at which time FM will take the lead in identifying and hiring the right full-time financial person for the firm, and effect a smooth transition to his or her management. Financial Managers Trust 781-799-5737 | FAX 781-788-9794 PO Box 2 Lexington MA 02420 PO Box 1527 Fort Myers FL 33902 www.finman.com Newsletter developed by Blue Penguin Development |