America is in trouble. Or so that’s what the news says. I know, I know, the news always says that. Let me specify. I’m talking about fiscal cliff, baby…and it’s coming for ya. What is the fiscal cliff? The fiscal cliff refers to the potential economic changes that could come into effect on December 31st. This date was initially set in 2010 and 2011 when unproductive meetings of the nation’s Congress—they thought they were really smart then when they set “deadlines” of when decisions needed to be made. It makes sense, right? If you’re not positive that you can get something done on time, make a hard deadline and put in place severe punishments if certain requirements are met. Well, it’s 2012 now and tax cuts are still in limbo, the deficit hasn’t been reduced and all of these “deadlines” originally set by the politicians are fast coming to fruition. What does this mean? It means that tax increases and spending cuts will automatically be triggered into existence. What is the result? Economists all over the nation right now are switching off from crying under their desks and smashing plates in public.
So why does this matter to you? You—the entrepreneur, who selectively took yourself out of the system of suits, ties and power lunches—why should it matter to you? I was discussing this with a young entrepreneur friend of mine yesterday and we reached the conclusion that, although the fiscal cliff really impacts those that are heavily in the investment banking industry, those who are off Wall Street will still be hard pressed to escape. The reasoning is simple--- VCs, similar to pretty much any other type of lending institution, runs on its ability to procure monies from people and give said monies to other people. When terrible financial crisis-y things happen, money suddenly becomes kind of an increasingly valuable commodity to have in liquid form, and people aren’t so excited about giving away that money any more.
So what am I really saying? No, this is not the end of entrepreneurship. In fact, I would argue that this is simply a more robust way of the entrepreneurship world to weed out the weak (sorry, weak guys. But that’s not you, right? Right?). Just as when the first onset of the recession happened, this tightening of the proverbial purse strings might actually push the start-up culture to accept only the best. It is a surprising fact that the greatest volume of startups occurred during the years between 2008 and present. Although part of this is most likely due to the inverse relationship between unemployment and the perceived reward for entrepreneurial spirit, it could be argued that a lot of it can also be attributed to the fact that a lot of people have great ideas and need a little nudge to pursue them.
In conclusion, to the entrepreneurs out there, vote early and vote often. Hope that whoever is in office next (whichever side you may vote for) will make good decisions to get this economy going again. It was necessary for the government to do x, y and z. Entrepreneurs regularly feel the need to capitalize on growth opportunities a, b and c. But don’t let the “what’s supposed to happen” affect (too much) what you want to happen. Sure the economy could be looking gloomy right now, but that doesn’t mean that opportunity doesn’t lie out there. Despite the intuition that there is a clear line between the traditional economy and start-ups, the truth of the matter is that these “big changes” like the fiscal cliff, euro crisis and the equity pivot do have far-reaching implications. However, this could be a great opportunity to push the boundaries of what is normally “accepted” and to create something new and innovative. Necessity is the mother of invention after all.
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