Building an ark – a financial ark – for your family and friends is something I’ve written about in this column before. It involves reviewing your personal finances in the face of this great recession, now five years long and counting and without knowing how the future will pan out, doing whatever you can to build that ark as watertight as possible if the debt, devaluation and debasement floodwaters rise even higher and big enough to protect as many of your loved ones as possible.
Very briefly, the ark requires:
• A review of your personal finances so that you know exactly your position regarding income, expenditure, savings and debt, future financial requirements (to educate children, for healthcare and retirement).
• Steps to strengthen your financial position, whether that involves eliminating debt faster, spending less, conserving more, protecting what wealth you have from external risks such as increasing taxation, banking insecurity and currency debasement.
• Parents and grandparents, children, siblings and cousins speaking to each other and dearest friends about the ark building you are doing and inviting them to join the ark.
• An extended-family wealth audit to see how the ark can be strengthened and resources shared if the financial flood gets worse. It means reassessing the family unit – the nuclear versus extended one.
• Looking at ways the family wealth – once everything has been done to preserve and protect it – can be fairly and appropriately utilised so that the children continue to be educated and trained; healthcare and emergencies are met; that family businesses don’t go under (or its young people forced to emigrate) for lack of an overdraft, a start-up loan or collateral.
• A proper legal/accounting structure.
The idea is slowly catching on with many people in Ireland – who don’t even know they’re building an ark. But the ark idea extends to communities as well – interest groups, neighbourhoods, villages and towns that should be encouraging the accumulated talent, resources and wealth in the community to work together for its continuing survival.
Many places have already seen a surge of volunteerism. Dragon’s Dens and private equity angels are popping up in communities inviting entrepreneurs to pitch them business ideas. Mentoring, by existing and retired business people, is thriving, often leading to them making equity investments.
Yet indigenous businesses are still failing at a rate of about five a day. In its recent survey, business and credit risk consultants Vision-Net found that while this rate of failure is down 15% from July 2011, of the over 9,428 Irish companies they stress-tested, about half are at high risk of failure.
The reasons are obvious: not enough customers; not enough access to capital; banks calling in debts and raising the cost of debt servicing. According to Vision-Net, businesses in the hospitality, construction, IT, motor, wholesale and retail sectors are most at risk of failure.
“Who’s left?” you might ask. Clearly, the much-lauded foreign-owned multinationals (which still only employ about 100,000) and people on the government/ taxpayer payroll.
This column’s beat has been personal finance, but I’m convinced that not only should every one of us should have an ark, but with business failure figures like this, every community needs to be ark-building too.
The idea is to find ways to incentivise the community to not only spend its money locally on a regular basis, but more of it too.
The popular discount coupon schemes have helped (though at a high initial cost to the retailer).
Has your town considered its own “currency” – a form of exchangeable (and branded) scrip or that gives locals and visitors extra spending power? There have been mixed reports (from here, the UK and US), so it might be worth investigating how places like Fermoy, the first reported town in Ireland to issue its own “money” that would stay with the participating local retailers have managed. Or check out how well Clones, County Monaghan’s old punt exchange has worked to support the funding of town events such as the St Patrick’s Day parade and their Christmas lights this December.
If we want businesses in local communities to survive, we need to support them and we need to start spending more money with them.
Even diverting 5% worth of a weekly shopping basket (€200 for a typical family of four or five) diverted from imported foodstuffs from Tesco, Lidl or Dunnes shelves to a local producer or farmer’s market is an extra €520 (€10 x 52 weeks) spent in the community also supporting local jobs.
The worst-kept secret in this country is that the black economy is thriving again, “but it’s also probably the single reason why the emigration figures are not higher than they are,” a financial adviser told me recently.
“This will only change only when it makes sense for people who are topping up their dole or their struggling businesses to fully declare all their business again,” he said. And that can only happen if they get sufficient custom to afford to pay the higher taxes and the heavy cost of the dead hand of government that every business suffers in this country.
Since the Dáil is now the fiscal glove puppet of the EU/IMF/ECB (who don’t really care how the billions they’ve lent us is repaid) it’s up to all of us outside the protected political circle to do what we can to build these arks, no matter how small the effort.
Perhaps we can all start with our next purchase.