The City of Chicago recently decided to move the annual fireworks display out of Grant Park and push back the date from July 3rd to July 4th.  This was in part to cut costs; but also an effort to scale back the event so that it’s not such a security concern. As a business owner, I applaud the efforts to cut costs, but was this a wise decision? My friends, co-workers and community are quite divided on this issue.

On the one hand the Chicago fireworks on July 3rd is a unique tradition.  Where else do they have a big fireworks display on the 3rd?  It allows everyone to stay out late to watch the fireworks and still get to work on the 5th.  It’s unique and part of what it means to celebrate in Chicago. It also meant that a lot of suburban folks could make it down and celebrate in the City on the 3rd and still be in their community on the 4th.  In our city neighborhood we traditionally have our block party on the 4th, but many of us would go downtown for the big display the night before.

Further, there is something powerful about community celebrations that bring us all together.  The lawn of Grant Park was nothing if not a spectacular melting pot of all that is Chicago, city and suburbs.

I’m sure the security is an issue for events like this.  The last several years have seen some violence and even shootings during or immediately after the fireworks.  Further, the huge crowds and press to get on the trains and busses must seem like an easy target for a terror attack.

How then could what is good about the event (the unique July 3rd date, the melting pot, a way to celebrate together) be preserved and still meet some of the city’s goals for cutting costs and reducing security risks?

Spreading out the celebration is the easiest way to reduce the security risk, but we lose the essence of all of us celebrating together.  While I don’t want to be arrogant and say, “We have to have this celebration, we need to just find a way to make it secure.” I’m also aware of the irony in canceling a celebration of our country’s founding out of fear of terrorist attacks.

When I mentioned this in my recent newsletter I received several comments about getting sponsors to reduce the cost.  People questioned the lost revenue for the downtown businesses and the effect that has on the overall budget equation.

Will Chicago’s decision be a case study for how slashing your budget can solve an immediate problem while creating a long-term problem at the same time? Or, will it be be heralded as one of the greatest cost-cutting moves/compromises of all time? What do you think?

In the last week I have attended two different economic forecast presentations (one at the Executive Club, the other with the Association for Strategic Planning), where I heard 4 different economists (Diane Swonk, and David Hale) and prognosticators (Bob Froehlich, and Andy Busch) describe what the see in the year ahead for the US and world economies. I am not an economist and so what I’ve written here is my interpretation of what they predicted, not predictions of my own.

The first observation is that the four predictions I heard had widely varying views. I don’t remember a time when I have seen more divergent opinions about what the future holds. This reflects significant uncertainty that exists in the marketplace, political uncertainty, uncertainty with global markets, and some uncertainty about how businesses and individuals are going to react to these forces.

The political uncertainty is perhaps most obvious. Massachusetts seems to have put a nail in the coffin of the healthcare reform bill (as it stands right now), but the administration needs to pass something, so changes in how the country handles healthcare (17% of the US economy) stand as a significant uncertainty in the short term. Once congress gets through the healthcare debate, they will move on to environmental reform (cap and trade) and questions about what to do with the expiring Bush tax cuts. Additionally of the $700B+ in stimulus money approved, only about $250B has been spent, so the government is also wielding further stimulus opportunities. Each of these has a huge impact on businesses of all sizes, but in concert they make it very hard for business leaders to have confidence in making decisions for the future.

With all this uncertainty it is difficult for businesses and individuals to spend money. In fact, both businesses and individuals have stopped spending money for most of 2009. Corporate profits are up, and corporate balance sheets are strong. In 2009 large companies saw net cash influxes of over $250B, five times what we would see in a normal year. Households have been paying off debt and the net household savings rate has gone from -1% to +4% or so. But with the economy improving and inventories growing that may change.

Still there are some pieces of good news. Everyone seems to agree that the economy grew in 4Q09, maybe as much as 4% – 5%. Some of that was stimulus related (Cash for Clunkers, etc.) but some if it was building inventory. This is a very positive sign and 3 out of the 4 economists that I heard felt like that trend would continue through the first half of 2010. Particularly strong sectors are healthcare (despite the reform bill) and exports. With another $500B of stimulus still to be spent, the economy should have a bit of a tail wind for two quarters or so.

The world economy has recovered much more quickly than the US and with record level deficits and near 0% interest rates we should see the dollar continue to weaken through the year making US goods highly competitive on the world market. This trend has a chance of pulling the US out of this funk. However, a weak dollar is not in the best interests of the rest of the world, and could eventually set the stage for strong inflationary pressures in 2011 and so the Fed is likely to issue a token (1/2 point or so) rate increase toward the end of the year.

China is now the largest consumer of commodities in the world, and their economy’s strong growth (over 10%) is holding the prices for metals, and oil, high. Can China keep up this growth pace without triggering inflation, or a currency revaluation?

So how do we know which of the forecasts is right? I’d suggest watching some key indicators. Now that the Obama administration has suffered some defeats, and have a better understanding of the constraints that they are under, do they shift back toward the center? If so, expect stronger second half growth. David Hale suggested that the Administration was floating the idea of extending the Bush tax cuts “as is” until 2012. This would have a horrible effect on the deficit, but would be stimulative in the short term. China needs to continue to tighten the reigns on their economy to control growth and keep commodity prices reasonable. Do they continue to raise interest rates, or go further and revalue their currency? Lastly, in the face of significant unemployment and uncertainty, do US households go back to spending some money, or do they continue their efforts to de-leverage and save? Any of these would increase the likelihood of expansion this year.

One other trend to watch; State and local governments need to raise money, in some cases a lot of it. They have a limited ability to raise taxes in this environment, so we will likely see a move toward selling more assets. Chicago is ahead of the curve on this trend with the parking meter sale, the Skyway sale and the attempted sale of Midway Airport. Arizona even tried to sell their statehouse last year. Outside the US the majority of airports are owned by for profit operators, the US should start to follow that trend in the next couple of years.

So what should you do now? If you sell to large companies, and particularly if you are selling goods or services that improve efficiency, you should hit those customers hard now. Large companies have cash and they have laid off a lot of people. They want to do more with less, if you can help them to do that they will spend right now. If you have customers who are exporters, their business is likely to pick up in the short term. We should see hiring and expanding inventories to support that growth. Healthcare has strong underlying fundamentals, and as long as the healthcare reform bill creates a straightforward path to get paid, these businesses should continue to grow effectively. If you are not positioned in one of those industries, look for the companies in your niche that do have exposure there and chase after them. There are always healthy companies in any economy, we just have to find them.

It’s going to be a wild ride in 2010, and there may still be a lot of pain, high unemployment and slow growth for the next 12 months or so, but the dark days are behind us and we should start to shift our focus forward. I urge you to move from a defensive stance and begin the process of aggressively expanding your sales and marketing efforts toward those sectors seeing growth. Get help from a professional sales coach, or create a more comprehensive marketing plan to capitalize on this window of positive momentum to grow your business while your competitors are still hiding in their caves.

Something is shifting and I think it’s just the current incarnation of the shift that’s been in progress for a long time, but it’s getting faster, and spreading wider.

9 years ago when I started Anchor Advisors, Ltd. I noticed how easy it has become to start a business.  You go to VistaPrint and choose a business card, find a template for a Web site that looks good with the card you choose and you are in business. Total cost, 10 hours of my time, $0.  The friction, or barriers to entry for creating credible collateral were very low.  Once the business got going, I eventually designed a card, and got a professional Web site, but why invest the money until you know it’s a going concern?  The production value of the templated solutions was “good enough” to get started with, and it took no time or money to execute.

Then came Blogs, and YouTube, then Facebook and now Twitter.  More and more of what we read and look at is created by amateurs.  The production value of most of the blogs that I read is low, they are produced by their owners with little or no help from “professionals”.  The production quality of the most popular videos on the Internet is basic.  We don’t have our blog posts edited by professional writers, we don’t have our tweets crafted by a copywriter.  More and more creative content is being made in some form of DIY manner.

And the tools to do that are expanding as well; the Flip camera makes video easy to shoot and even edit.  You can edit your photos using online tools without even buying expensive photo editing software.  OK, nothing makes writing easier, good writing is still hard, but at least Twitter has forced us to keep it short!

Phil Johnson posted an article on the AdAge Small Agency blog about this trend and how it’s forced him to create a whole new department in his agency that’s focused on lower budget, quicker turnaround, higher volume content to feed social media.

Is this the erosion of the creative class?  Have creatives lost their place as the crafters of communication and design?  No, there will always be a need for elegance, effective design and well written copy.  However, there is also a tolerance, even an appreciation for the unproduced, unvarnished, amateur production as well.  Lowering the bar has resulted in an explosion of content being created, and much of it is DIY.

The really excellent design is going to be reserved for only those projects with large impact and budget.  Company identities for successful going concerns, packaging for consumer products, annual reports, etc. will always deserve the value of a professional design.  It might even be valued more as it “stands out” from the crowd of amateur produced stuff we look at all day.

But there is also going to be more and more content created by amateurs, and the are going to want their stuff to look and sound good.  Teaching basic design and writing principals to the masses represents a huge opportunity.  Creating tools to enable easy, high quality DIY content is another.

It’s a brave new world and I don’t think the trend is going backwards any time soon.

How do you see this trend impacting your business?