The 7% Solution
Unlike the fictional novel “The 7% Solution” by Nicholas Meyer, the 7% inflation drama that we are experiencing now is non-fiction with no obvious solution, numerical or not, other than to try and slow down a heated economy.
As I have mentioned in previous Reports, the drivers are:
The tight labor market continues to push wages up.
Demand continues to push the cost of goods up, BUT… this could be mitigated by spending going from goods to services, such as travel and hospitality.
Set your travel plans now because those prices will start going up.
Covid and the supply chain. Yes, covid will continue to be an issue, particularly if China continues to close factories and ports whenever a seagull sneezes.
Remember how I said rates would be increasing by 0.75% in 2022? Well, I am already wrong. The Chairman of the Federal Reserve, Jerome Powell, mentioned last week that there would be four rate increases this year. 4 x 0.25% = 1%.
As a business owner, that will increase your interest expense, which of course, is fully tax deductible, but only if your revenues are under $25 million.
If your revenues are over $25 million, you could be limited to what you can deduct on your interest expense – please ask your CPA about the bad news.
Locally at Monster Beverage in Corona, California
They are venturing into the adult beverage space by agreeing to buy CANarchy Craft Brewery Collective for $330 million.
Brands include Cigar City, Oskar Blues, Deep Ellum, Perrin Brewing, Squatters, and Wasatch. No worries, I haven’t heard of them either but evidently, they are worth $330 million.
The Inland Empire doesn’t have any Fortune 500 companies headquartered here, but we are getting close. Monster is #562, so at some point, we will.
Just in case you were curious about Monster:
Revenues of $5.3 Billion
Market Value $47 Billion
$1.4 billion in net income
The Coca Cola Company owns about 20% of Monster Beverage
And all here in Corona with its roots in Hansen’s Natural Sodas. Go figure.
Martin Luther King
When I was in 3rd grade, each of us had a few lines to memorize about MLK’s “I Have a Dream” speech, and I have never forgotten it. I think it was around 1971.
He was a man that strove to change things without violence but with a will that would be stronger than any of his opponents. I think he succeeded in that regard.
He had to inspire his followers and constantly motivate them every day, no different than any business owner trying to motivate their employees. As a preacher, he was first and foremost, a motivator. Here are some memorable quotes, many of which should be on posters and probably are:
Never succumb to the temptation of bitterness. That’s easy to do when your competition gets the contract.
We may all have come on different ships, but we are all in the same boat now. No explanation is needed on that.
The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.
Be a bush if you can’t be a tree. If you can’t be a highway, just be a trail. If you can’t be a sun, be a star. For it isn’t by size that you win or fail. Be the best of whatever you are.
A genuine leader is not a searcher for consensus but a molder of consensus. Are you a manager or a leader?
All of those apply to any organization, whether you are trying to change a nation or just get your workers psyched up for the week. Are you and your team doing their very best every day?
While Martin Luther King’s birthday was really January 15, the third Monday of January is used to observe MLK day. Think about how his quotes apply to your business.
Oh, and your banker won’t be returning your call today.
