When the news reports on ‘the economy’, be it American economy, Japanese economy, or any other sort, they are always reporting an average. Individuals vary on their economic performance depending on their financial intelligence and other factors (such as being downsized or something). In your life, you can recall your financial health going up and going down and the biggest factor in it was YOU or the company you worked at.
Some of America’s wealthiest men came from the 1930s ‘Great Depression’ era such as Rockefeller. The dirty secret is that in times of ‘average’ economic decline, or perceived decline, is one of the greatest ways to make money. Where everyone else is scared and pinching pennies, you are going forth where they are not. The point is that ‘recession’ and ‘depression’ means recession and depression only for the average people. When you stop being ‘average’, none of this will affect you. The same is with businesses as well. When a business points to ‘bad economy’ for the reason why it is not doing well, you can safely say there is something wrong with their business model.
It is easy for business models to work when it is in front of a growth trend. A clear example in all this would be real-estate. You know it is time to leave the market when bus drivers and shoe shine boys are entering it. Soon, the trend of growth was reversed. While real estate investors who knew what they were doing kept making money, those who didn’t got slammed.
Blaming the economy for your business woes is like a farmer blaming frost for the failure of his crops. Every farmer knows seasons come and go and should prepare for frost that might cyclically come. In the same way, a businessman knows he cannot take continuous growth for granted and should prepare for hard times. In fact, he shouldn’t even look at it as ‘hard times’ but as yet another opportunity.
The reason why Nintendo is one of the most profit happy companies of the world is their attitude toward a crisis. No one would have blamed Nintendo if they said, “As the Japanese economy declines, so does the Japanese gaming market.” And, especially, investors would not have blamed Nintendo for saying, “We expect decline in the Japanese gaming market because the population of Japan is shrinking meaning less customers.”
Instead of framing the events as a crisis, Nintendo turned it into an opportunity. They said, “How do we make more customers?” And they came out with the DS and Wii. This way of framing a crisis into an opportunity is a major habit of Nintendo. When Nintendo was hurting from Yamauchi’s failed side projects, he got Gunpei to begin making toys. When Nintendo bought many bowling alleys to convert them to shooting ranges, the Japanese economy began to sink and the shooting ranges became empty which threatened the company. To save itself, Nintendo began distributing video game consoles. When Nintendo of America got stuck with an arcade game that was no longer selling and would collapse the company, it converted those arcade cabinets with Donkey Kong and made a major hit. When the entire console video game market crashed in America with Nintendo losing a potential distributor of Atari, they released the NES themselves and turned ‘crisis’ into fortune.
In recent history, when PSP was outselling the DS in every market, Nintendo came out with “Nintendogs” and what happened to the DS then?
When someone blames the economy for a company’s decreased profits, we can be assured that the problem is really with the company and the product itself. It is said that the American economy is ‘down’ and yet…
-Wii systems are STILL sold out.
-$400 iPhones keep selling as well as iPods.
-Sports games have their seats full.
The list can be continued ad infinitum, but it is not that ‘bad economy’ hurts businesses. Rather, it is ‘good economy’ tolerates poor business models. When a company, or person, blames the economy for their plight, they are saying they do not believe they have control over their success and failure. When someone implies that, they deserve to fail.
A young person at Sarcastic Gamer asks about whether the credit crisis will affect the game industry. That should not be his worry. His worry should be “Will this affect my tax rate?” and “Will this affect my retirement?” Most people will not be able to retire. When this realization sets in, it will be a panic.
If there is any ‘message’ that I’ve ever wanted to get across to readers, it is this: study money. You will use money all your life. The more you understand about money, in how to make it, in how to invest it, the better your life will be not just financially but in health and in love (marriages revolve mostly around money). If you think you are ‘too good’ to study money, then you will be slapped upside the head in the future. By studying money does not mean give your money to someone else to invest for you. Learn yourself. Knowing how to read money is more important than how to read books (and we know how important reading books are). No matter what country you are in, no matter how old you are, no matter whether you want to or not, you *have* to study money.
Historians generally agree that there have been three major changes in Mankind. First, there was Agricultural Revolution. This allowed civilization. Second, there was the Industrial Revolution. This allowed the massive population boom which created more minds which, with more minds, created even more inventions. Third, there is the Silicon Revolution which we are currently in the midst. If you are a young person, you have already witnessed the Information Change with the multiplication of computers and the Internet. We are on the verge of an Entertainment Change when the Internet, used so far for information, will soon be applied for entertainment. And other changes will come, naturally.
Through an American lens, before the Industrial Revolution, everyone was financially literate to a point. Everyone was a business owner, even poor farmers! It was the Industrial Revolution that when people could leave farms and work in cities that such things like pension funds and all could be made. The idea was that if you worked for a company long enough, they provided you with retirement.
Now as we go through the Silicon Revolution, things are changing back to the pre-Industrial Revolution model. YOU must plan your retirement. Companies no longer have to (or are able to). Western Governments will no longer be able to fulfill your retirement. Don’t become trapped in the past and live your older years in poverty. Learn about money today. Your life and those of your future family depend on it.
“When will I know that I am done with learning about money”
You are NEVER done learning. The reason why your tax rates are about to skyrocket is because old people thought they didn’t *have* to learn about finances. Everyone agrees that there is no free lunch. Soon, we’ll learn the hard way that there is no free retirement.
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