Globalization of Money

Globalization has many impacts on the small business owner, the mom and pop brick and mortar stores. We only need to drive down our city streets to be presented with the harbingers of business death that permeates our culture, the brightly colored banners and the day laborers walking with huge signs screaming “Store Closing – Huge Markdowns” and “Save 50-70% Inside”. After all who doesn’t love a deal, but at what cost? In the detective novels, the intrepid detective often utters the cliché, “Follow the money”, the same is true if we look at the global effect of money and small business failure we find a real chicken and the egg challenge.

David Robinson, in his Buffalo News article “Globalization hits home in HSBC selloff” states, “That’s why it’s so important to nurture the home-grown businesses that remain. They’re more likely to support local community events and cultural activities. They feel they have a stake here. If those top executives cut local jobs, they have to look their neighbors in the eye the next day.” More and more financial institutions are closing, merging, and moving overseas, leaving their customers and business customers which rely on their credit, and business products to facilitate the day to day running of their businesses. When there are fewer choices in a tough economy, the small businesses are often the hardest hit. They have the smallest cash flow reserves, the most sensitive reactions to increased fees and changing lending practices.

The bailouts, which were to have made available to the consumer housing market and the business owner eased access to lending has failed utterly, with banks taking the money, covering and shoring up their losses, paying themselves uncalled for bonuses and not delivering the intention of the money. The mortgage market continues to freefall, construction business financing is still bone dry, and after all that banks continue to fail and abandon us.

Access to working capital and the relationship with business friendly banking and financial institutions is vital for a thriving small business community. As there become fewer and fewer choices through sale, merger, and closing there are natural and inevitable consequences to the small business owner. As businesses continue to close and struggle it becomes less attractive for banks and lenders to extend credit and invest in that market segment, and as lending becomes tighter, and banking options close up more businesses will struggle and fail. Which came first?

Source:

Robinson, David. “Globalization hits home in HSBC selloff.” Buffalo News June 19, 2011. August 28, 2011 http://www.buffalonews.com/business/business-columns/david-robinson/article459929.ece.