How World Events Can Affect Even Domestic Staffing Firms

ThinkstockPhotos-102767081Most domestic companies tend to concentrate on their local market and not pay much attention to what is happening around the world and in the area of international business. But even if you are not selling to foreign clients, the state of the world economy may very well impact you, sometimes in a way that is not readily apparent. Here are a couple examples.

Say your local staffing firm serves a local manufacturing company. If neither of you does international business, how can international events affect both of you? International currency has different exchange rates with the US dollar. Although a few are linked to the dollar, such as Hong Kong and Panama, the vast majority of currencies float with our dollar and over the past few years have been devaluated. For example, the Euro has depreciated 24% vs. the dollar. This means US consumers can buy foreign goods at a discount, but this tends to make US-made products are that much more expensive. Those domestic producers using your services may be faced with the fact that their products could be that much more expensive if they have to compete with European suppliers. Similarly, they may need less manpower requirements as well.

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We are also living with an unstable world with real damage having already come from state-sponsored cyber-terrorism, ISIS destabilization, naval conflict in the South China Sea, the Euro sliding if Greece defaults, a military incident due to Russian aircraft incursions, etc. Any one of these events could lead to a loss of confidence in a fragile world economy and stock market, which the US can not isolate itself from. The paper losses just in one’s investment portfolio could result in the liquidity to finance their business or being out of conformance in their bank covenants; neither of which is related to the underlying health of one’s business.

These are exogenous events, wild cards that most all companies can’t really plan for specifically, but you should at least have some sort of contingencies to fall back on when events not of your making happen. For example, before the advent of cloud computing there were disaster recovery companies that kept companies computer systems running in the event of the loss of ones physical system. Don’t wait for the unforeseen to happen. Develop a plan today to ensure your company can survive an international event.

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Michael Neidle

Michael Neidle
Michael Neidle is president and CEO of Optimal Management, an advisor to staffing firm owners and managers.

Michael Neidle

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