I own Business A. I need to upgrade my lighting in my business. I prefer incandescents for a variety of reasons - my product looks better under them, my fixtures currently work with them, I like them better, what-have-you.
Right now, there's a repeal working its way through Congress. Hey, if it goes through, I get to continue to buy the product I like best. If it doesn't, and I don't want to use CFLs and halogens have some side issues that concern me. LEDs aren't an option because of their poor quality of light.
What do I do?
Okay, let's add a little more to make this close to what I was talking about. You also have the cash to go in a few directions.
Now, here is what I would tell you in the real world (in case anybody is in or knows someone in this position), call up Nela Park (GE) And their Lighting Institute and ask to speak to them in a consulting position. The lighting were talking about here is the shittiest kind available. It is cheap. That's THE only reason they still sell it. Trust me on this.
But, okay, let's say there is someone's real world case and we don't have standard incandescent bulbs that meet the new standard (hint, we do, it wasn't that hard to make them, seriously, I can't stress this point enough, the bulbs being phased out are crap, they're specifically manufactured to be crap).
Okay, you have a choice. See, the bulbs we're talking about won't last you a year in a retail/business environment (unless you don't turn them on, and this question is moot at that point anyway). And let's say you and all your employees and customers are the minority of people who can see the flickering of the cfls/incandescents. And for some reason buying a warm light LED bulb is, I don't know, not an option (the argument about not liking the light is non-sensical, you've just been buying the cheapest bulb available and you get the crappiest light, you aren't noticing it with the incandescents because you're used to it (but I can tell you that as bad as those cfls and cheap LEDs look, the same is the case with your incandescents if you're buying those that can't meet the new standard, and for a business, crappy light is deadly).
Here's the solution for you, stock up on bulbs. It's an expense you would have to make anyhow. And since you're making a bulk purchase (if you're buying the cheap bulbs, trust me that you're buying in bulk here) that you should be able to itemize it and depreciate the value (this only works because you're buying in bulk). Problem solved, cash spent. You know, until 3 or 6 years down the road when you're now out of bulbs. But then your in the position you are in now. Hopefully you've planned for the conversion by now and are ready to go.
If Congress repeals the law (again, can I say how much this is a tempest in a tea pot? Seriously, this is a non-issue), well, you would have had to buy those bulbs anyway. If they don't, then you're positioned to get more of your ducks in order to make the switch (and if you were in business and haven't prepared for this, frankly, 1) you're wasting money with inefficiency and 2) you aren't really competitive). So, no matter what happens you're ahead of the game (except for not being prepared for the new regulations that were passed over 5 years ago).
I sit and wait to see what Congress is going to do. Maybe I go out and buy up a supply, delaying my decision. Maybe I hold onto the cash pending the development of a better light bulb.
If that's you're plan, you're screwed. Doing nothing, and engaging in wishful thinking is a sure way to lose. The old maxim, "pigs get slaughtered, rabbits get skinned," is true in investing and in business. Standing still in business is not an option.
What you can do (valid strategy) is plan for the worst case scenario and move forward. If things turn out better than you planned, that's great. But sitting on the sidelines is a sure way to have someone else eat your lunch. Not growin, or shrinking, or going out and finding business, or meeting your customer's needs (try and sell something in a dark showroom) is a sure recepie for business stagnation. Which leads to death. I've seen it too many times.
Uncertainity is indeed an issue. Maybe it's the MBAs running the show. Maybe it's my uncles in their businesses -not one of them is an MBA, btw - who say "Until I get a clue what's going on with the health care, I'm not doing anything."
There is always an excuse for doing nothing. Again, engaging in wishful thinking. Understand that even if you get you're way and ACA is repealed, then it'll be "will Congress extend the Bush Era tax cuts," (earliest repeal will be next year, tax cut extension expires December 2012). There's always something that you won't know. Hell, Democrats could retake state governments and the House as well as keep the Presidency, and then your uncertainty will be if they increase taxes. There's always some excuse to not do something.
Edited to add Understand the issue is if you have unproductive capital (ie. cash on hand). Now, if you're struggling with cash flow, those are different issues. But with the cash, you can do various things. However, letting it accumulate a great deal without a plan (such as short-term investments to grow cash while you're pulling together enough capital to do a big move) just isn't smart. And that's what is happening with much of this cash companies are keeping on the books. It's sitting in (at best) short term, quick liquidity vehicles.
Running your business without examination will run you into the grounds. There is always going to be uncertainty in business. It's part and parcel of the business gig (and one of the reasons I'm not running my own business at this point, btw, I understand the paralysis of not knowing which way to turn, also I hate sales). So, if you're using some future possible event as a reason for staying still, maybe being in business isn't really for you? Because, like I said, there will always be uncertainty.
If you're in a business that doesn't have that, I want to know what it is.
Letting the cash sit helps no one. Non-working capital is outside the economy (economy is the movement of cash, unproductive capital is a negative on GDP, etc). The technical recession is over, has been for over a year and a half now. Except for construction, most retail numbers are back to normal. So what's different? All those businesses are sitting on their cash instead of doing the smart thing. Because they're afraid. If it continues for too much longer, it'll become a self-fulfilling prophecy. So the goal is to get that capital moving and working. Hell, pay it as a dividend to your shareholders.
Right now is the exact opportune time to make a move. Waiting until everybody is moving it too late. You'll have missed the boat, and even if you're able to catch up, you'll be paying a premium for it (both in costs, and in any loans you may have to take). Building your business now is the smart money. In two years you'll be reading about the companies that are doing that, because they'll be the industry leaders (like I've said before, this isn't my first time on this merry-go-round).
Now, if you're facing the opposite problem (not enough cash flow), then you have different choices to make. And in either case, YMMV (not everybody's situation/market is the same as others).