Why Entrepreneurs Benefit from the Weak Dollar
I just read that more than 5 million people watch iCarly every week. And that more than 22 million Kid Rock albums have been sold in this country alone. But I'm not going to take that as evidence that we're a country on the way down. I understand that Allen Iverson made $29 million last year, which is $28,923,000 more than the highest-paid school teacher in Philadelphia. But that's no reason to panic. And I'm not going to let the weakening dollar get me down. Yes, I read the papers. Yes, I see our greenback reaching new historic lows against other currencies on a daily basis. But I'm not upset about it. Most small businesses buy products and services from local suppliers and sell products and services to locally based customers. Sure, we've been hearing about the evils of a weak dollar: how our purchasing power and prestige is diminished. How it's become much more expensive to travel and buy stuff overseas. But if you're a pizza shop owner, an architect, or a local electrician, none of these things really make a difference to your profits. In fact, there's some good news in the decline for smart entrepreneurs. Like the fact that our goods are cheaper. Companies and consumers in other countries are buying more of them. There's the firm in Lexington, Ky., that's selling its high-end audio technology, now competitively priced, to a growing base of overseas buyers.There's the company in Minnesota that sells trucks to the Middle East and finds that more than half of its forecasted sales now come from overseas. Cheaper Goods Boost Foreign SalesThen there are the international giants like Coca-Cola (KO), DuPont (DD), and Boeing (BA) that are seeing large jumps in foreign sales, and the small firms that sell products and services to them that are reaping the benefit. There's the Seattle company that sells wastewater treatment products overseas that's exploding with growth because of the weak dollar.Even industries in hard-hit states like Michigan are finding relief from this recession as foreign buyers are snapping up cheaper autos and parts. And then there are the countless small companies that sell online to customers in far-flung places that can now afford their products. American farmers are selling more wheat and soy to countries in need of food than ever before. This is all because of our declining dollar. Cheaper goods allow some smart business owners to open new markets and make new relationships. One client of mine has been getting unsolicited quote requests from all corners of the world. He's now wishing his new friends in India a Happy Diwali and future drinking buddies in Russia a joyous Victory Day. Because of the falling dollar coupled with the ease of communicating over the Internet, a growing number of smart business owners are building relationships with smaller companies outside the U.S. A weak dollar has given some small businesses the opportunity to revisit their domestic customers, too. These were the people who used to buy their products overseas until the low exchange rate made things so frigging expensive. Now we see retail groups and chambers of commerce in Seattle; Portsmouth, N.H.; Hernando, Miss.; Denver; and dozens of places around the country urging their neighbors to buy locally. Americans are buying more American-made products because they're cheaper to buy than the foreign-made goods. Remember outsourcing? One company in New Jersey closed its call center in Israel last year because it was too expensive to operate in a weak dollar environment. Similar companies running call centers or offering programming and other information technology services in the U.S. may well find a growing number of customers coming back from India.Influx of Travelers and InvestorsA weak dollar brings more visitors to the U.S. The travel industry had a lousy year in 2009. As a result, there are now much lower online fees, air fares, and hotel rates around the country. And small businesses are benefiting. Hotel occupancy and related tourism services are up in Massachusetts. Officials in New York are bracing for an influx of foreign tourists. Already tourism officials in Las Vegas are reporting increases in visitors and gaming revenue. With a cheap dollar and a recovering worldwide economy, I expect to hear many other languages spoken at Disney World and other American tourist destinations this year. Smart business owners who cater to the travel industry are making this bet, too. A weak dollar brings in foreign investors. International companies operating in Gainesville, Ga., are ramping up production, employing more people, and providing opportunities for suppliers. In Chattanooga, a French company is hiring 300-plus employees and doing business with dozens of smaller local companies as it finds it's cheaper to set up shop in the U.S. Foreign firms and individuals are hungrily eyeing real estate deals in America that haven't been this cheap in decades. That will lead to sales commissions, development work, and construction projects for local small businesses. The U.S. stock market has risen more than 30% since the beginning of the year, fueled by the low dollar and the attractive pricing of American stocks. Business owners and consumers like myself see our financial worth rise, breathe a sigh of relief, and start spending a little more. So tell me, is the U.S. in decline? It's possible. There are millions of Americans killing brain cells watching Glee and The Biggest Loser each week. But the falling dollar? This isn't a decline. For many small business owners, it's an opportunity.