Is business going to go well in 2025? A question from a listener gets the guys talking about reasons for optimism in 2025. Whether you are elated, despondent or in the middle, 2025 is sure to bring changes to the Federal government. What does that mean for small business owners?
Is business going to go well in 2025? A question from a listener gets the guys talking about reasons for optimism in 2025. Whether you are elated, despondent or in the middle, 2025 is sure to bring changes to the Federal government. What does that mean for small business owners?
Nate boils it down to a different question: what do you think is the role of government? If you think it should be smaller than it has been, or less intrusive, then you might naturally feel more optimistic than a person who feels differently. The experts discuss regulations, productivity, technology, and more. Ultimately, your optimism will determine your sphere of influence; and you can effect great change for the better in your own business and life in 2025–regardless of what you think about the Federal government.
As a quick reminder, the Expert Network Team provides free consultations. We would love the opportunity to be of service to you or someone you care about. Just scroll the liner notes to contact one of our experts or today’s guest. And please share this podcast with anyone who you think might find it interesting.
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Welcome to the expert network team podcast. Welcome to today's podcast. I'm Karl Frank. I've got Jeff, I've got Nate. Jeff Krumadick from One Digital Insurance and Nathan Merrill with GoodSpeed Merrill. And Karl Frank with the CIA. No. Oh no. That's off the record for sure. Definitely not spying on you, my friend. Happy New Year. Well, you've got a lot of things going on as we just talked about.
And I can't wait to catch up on this year. You know, I was talking to one of my business owner clients earlier this weekend. And they wanted to hear us. She's one of our regular listeners. Be optimistic about this year. She is not a fan of our incoming administration. And so what I thought we could do is explain some of the reasons why we're optimistic.
And maybe it's completely in spite of the incoming administration. Or maybe it's because of. But I thought it was an interesting perspective because I think there's a lot of stereotypes in the world that, you know, business owners are conservative. They're fiscal conservative. And I think there's a huge swath of the population that is, that is just not that way.
I think the vast majority of people we know is really just centered right down the middle. Right, and this is where the whole focus on the administration gets into the choosing a side of it. Like, is it my team or is it your team and that sort of thing. I think the best way to approach looking at any administration is, or understanding how you feel about an administration.
And having an honest conversation with yourself is what do you expect out of Guntlet? Right. Because by and large, outside of perhaps, I'll admit Trump might, this version of Trump might be something we have never, have not seen in a very long time. Maybe ever. Right. Maybe ever. Right? I mean, certainly they're making, talking a big game.
Doge and actually reducing federal expenditures. When's the last time federal expenditures went down? Devil. Well, at least regulations went down during Reagan. But Reagan had to deal with the Democratic Congress. Right, so. Yeah, and deficit went up under Reagan. Different. And that's exactly why I get to saying, what do you expect from government?
If you expect government spending, if you expect government intrusion or, or like that idea, right? Then yeah, I would say this administration is not going to please you. I, I suspect they will pull back from intrusion in the marketplace. They will, they will pull back on regulations. They will pull back on spending.
They will pull back. And if you see some of that pullback as removing essential services or whatever, you know, that's a separate argument, but it's not that it's Trump. It's like, what is your expectation from government? I like phrasing it like that. Yeah. Because You may get less but you will keep presumably if they if they do the yin and the yang if they spend less they take Less right.
Yeah, you get less from and more comes from the private sector and so for the for clients of ours who are entrepreneurs, I think it creates all kinds of We were just talking about opportunity that is created Right from being able to innovate and and move forward in the private sector If I have less concerns that the government's going to shut me down on that And take my money at the end of the day, I have more incentive to get out there and do things.
And we'll, we'll be starting new businesses and employing new people. I believe that's where growth in our economy in the American economy comes from is main street, not the government and certainly not wall street. Wall street is really cool. And you know, you invest the money there, but by and large main street is what's driving our economy.
Yeah, no, we invest in companies. Jeff, why are you optimistic? What do you, what's your take on this? Yeah, I mean, I, I really appreciate the question. So, whoever sent that in and is maybe listening here today just appreciate the question. I think it's great. You know, I, I think Nate, you, you really appreciate it.
Did hit it on the head and we, as a, as a country need to come away from there being two parties and really kind of come back to center and really focus on that question. Like what are we expecting from government? Right? Like I was just thinking a little bit and actually listening to some podcasts here over the last couple of days with regards to what's going on in California
And again, not to, you know, really point fingers because, I mean, obviously you know, a natural disaster is really oftentimes nobody's fault. Right? I mean, although in this case, although in this case, there might be some or might be some potential fingers to be pointed here. But yeah, I, I think you know, the 1st fire in California.
No, it's not. And, you know, I don't know that there's any. You know leadership or administration that kind of can stand in front of a hundred mile, you know wind driven fire But we had one here if we had one here and we just kind of watched it burn and let it do its thing and I think hopefully we Hopefully we've learned from Hawaii happen, right?
Yeah, exactly Exactly. So their examples they they knew this could happen, right? So I think you know, what do you expect from your government? I think is a great Example kind of playing out in real time here in L. A. And I know that's what I don't want, obviously from a government. And I think the thing that I'm I guess I'm encouraged about and what I'm excited about is the not the fact that, you know, this particular administration won the election or the other administration lost the election.
I think what I'm excited about is what I'm seeing is. Just how the team is being built. I guess the the experience, the executive leaders I think, I think traditionally like high powered leaders from both sides of the aisle are, are being assembled. And and being unified actually for to to move in the same direction.
Yeah. And, and so, I mean, traditionally, I mean, a lot of a lot of you know, people that have already been appointed to the cabinet oftentimes would have been known as as to, you know, fall on the other side of the aisle. And so I think we, we really do have more of a a center focus here. I'm, I think that's populism at some level.
Yeah. And it's getting. It's getting away from the bureaucracy or what we've come to call the deep state, the permanent, the permanent government has gotten too large and too unaccountable and the people that are coming in, more or less as outsiders or as disruptors. To that permanent government again, it gets back to what do you expect out of government if you'd like the idea of bureaucratic rule and regulatory state then you're going to be uncomfortable But if you think if you've ever tried to build anything in the united states or california Yeah, you and these californians are going to learn this real quick trying to rebuild under their regulatory regime is going to be An incredible challenge unless they figure out a way to exempt Yeah, and the I think the the structures on the coasts will not be rebuilt, right?
I mean that that's there's such a be insured. Well, they won't be yeah, they probably won't be insured So that's a whole other issue. Maybe another podcast at some point, but Yeah, you're right. The, the legislation is so incredibly tight just to pull permits. Sometimes it's, it's 20, 30 years in specific parts, especially on the coast of California.
So I don't know that some of those houses in Malibu are ever going to be rebuilt. How about that? That's terrifying. Yeah, I see two things and I don't know, but from, from, from my own personal experience, right, but one with the thought of less regulation means my business can be a little bit more effective than they used to be before.
So, finally, we won't be in, in living in so much fear of overpowered and. Quite frankly, capricious. Right. Yeah. And capricious and random and surprising regulators who felt the desire to, you know, express their own power and get promoted within our own organization by acting in surprising ways to companies.
And I think a lot of companies are feeling emboldened that way. And I think that's good for business and it's good for profit. I think The power of free enterprise is quite quite something if you think about it And I even think about what's going on in California. We won't get into that today But well, it's definitely another podcast on the horizon with with regards to regulation and insurance in particular not to say that it shouldn't be regulated but Many of the you know insurance companies that are still there are there against their will Oh, right, and some of them have been able to pull out Only because they they saw this coming but even just what what insurance companies can charge you know for an insurance or for a house or home insurance premium is regulated and Tapped by each state, whether it's Colorado, whether it's California, doesn't matter.
And if you just let free enterprise do its, its work, right. And, and take the restraints off from it. I think a lot of problems get solved. I think there's a lot of truth to what you just said. Yeah. And that's I think what I'm so excited about with this particular administration is we have a lot of leaders assembling that have incredible experience in free enterprise.
And I think. Think that way and what what made America great was was that and I think we have to come back to it and that that does mean fewer regulations. I think there's another thing too that I'm really excited about. And this is only internally through people who I know who are privy to some of the big decisions being made inside the government.
And that's we all know the massive inefficiencies is. In the government, right? Massive, massive, massive. But a lot of us don't know how inefficient it really is. And, and some of the military, famously the Navy, are using decades old technology. And so now you've got some tech leaders coming in. There's some Silicon Valley, very smart men and women.
They're gonna not take that as an excuse any longer, right? There could be incredible increases in efficiency, increases in productivity, decreases in costs. Yes, decreases in costs. That are possible. Right. And I think these, these, and quite frankly, they are a younger generation, right? They're in their forties and fifties, these new people who are coming in.
They're not going to take the excuses that got over the 60 year olds and the, you know, in the older generation who didn't grab, grow up in a digital world. Like, like all of the three of us are in our fifties. Right. So we've got, we've got a big advantage and the people behind us are maybe having a bigger advantage.
So there is a chance. That it could be more and more efficient. There is a chance government costs could go down. There is a chance that you know, that the incoming treasury secretary has a 333 plan. It's something like 3 percent growth every year. Every year. GDP 3 percent deficit, which is about a third of the deficit of what it is now.
And 3 million new barrels of oil a year. Well, that's pretty exciting, right? That would be a lot of growth if they publish that. Well, that 3 percent deficit could happen. Maybe we'll see. They think they can, so that's, that's different. 3% deficit. Oh. Of the g of the amount of money. So right now, the percentage deficit is huge.
Right? What? It's a trillion dollar annual deficit, I believe. Right off of a, you know, $26 trillion economy or something. Oh, I see what you're saying. Yeah. Relative to what? Relative to the, yeah, so it's to GDP, relative to GDP, DP. So getting it down, cutting it basically in a third. So basically we're still going to have a deficit.
We're still going to deficit spend, which is realistic, I guess, because to say we're just going to balance the budget overnight is always a challenge. But if you're saying we're just going to reduce the deficit to a third of what it is now, that's, that's ambitious. Yeah. Yeah, that's the incoming treasury secretary's stated wall street journal goal.
Yeah, three three three So anyway, I I think that there's chances of that with technological improvement. I think there's definitely Opportunities for business owners. So, you know, it's going to be chaos Change is hard. The the other side of deficit spending is revenue raising, right? So What is often misunderstood about the revenue raising is to raise more revenue, you don't necessarily have to raise taxes, you have to create more GDP, because, because revenue will always tend to normalize at about 20 percent of GDP.
So if you really want to raise more revenue, you don't, you don't abuse the taxpayer, you enable the taxpayer to make more money. Which triggers more transactions more that it's just every time it happens you see more revenue growth from GDP growth than from Slamming higher tax rates on people which actually kills GDP growth You might get an initial spike because you collected a bunch of revenue before people could plan But then once people start feeling more reserved and less optimistic and not doing deals The revenue shrinks back down to 20 percent of GDP.
And if you've shrunk GDP you've shrunk revenue And there you go. But what you do when you when you hide, but this is gets back to what do you expect to have a government. If you think government should be a principal player in the marketplace, government needs more revenue to spend so that they can control and command all of the economy.
But if you believe in the free market, like we do, you want to eliminate the role of government or significantly reduce it in the private sector or in the marketplace and let the private sector take over. The market and dictate and that's where you'll get the real growth from and it's been a big pivot from the last.
My name is Milton Friedman. And this is my message lecture number 15 from the grave. Yeah, it's a big pivot, right? This, the pendulum is swung far into the free enterprise realm. And that's the world we're entering. We'll see very ambitiously, very ambitiously and, and, and led by people who have done it in, in, yeah.
In places and very successful where you didn't think it could happen before like revolutionizing the the automotive industry, right? There are all sorts of opportunities here for massive improvements and and so I'm entering it Optimistically and quite frankly skeptically because not in our lifetime has governance spending ever gone down, right?
It's always increased year after year, right? So so this would be a massive change that we've never lived through So going back to some of the sentiment piece, because we're talking very technical terms about government, how it functions and the budget and all that. So I don't think most people voted on what Trump or his team was going to do relative to government spending or the budget.
But getting back again to the, the, the populist perspective of government is, I think people started to realize As they are in California, now we have the highest tax rate. What are we getting for Yeah. , what are we getting for it? Right. And and even, even people who don't pay tax are looking at the government saying, it's not serving me in a way that pleases me time for change.
I'm willing to try something different. Yeah. And so, yeah, that makes sense. I think people are ready for a change. Yeah. It's the fifth largest economy in the world. California. California is, I don't know if a lot of our. Viewers understand that I mean if you think about it, yeah, and yet it's being operated as if it's a third world country seriously, I mean there there are It is I mean There there's got to be accountability brought in on that.
It's just kind of my Soapbox I'm on with California right now. But I I think we're all I'll need to be excited about what's ahead. I mean Well, we'll have to see. I mean, they're, they're making a lot of claims and, you know, I guess what we can control. Right. And so in our own three small businesses relative to the world, we've, we've all got growth opportunities.
We're all excited about what, what's going on. I think Jeff's business plan and my business plan are a lot more simple than Nate's business plan, but. He's making new business plans all the time. We're just trying to maintain ours. Right? Yeah, that's exactly right. You do what your heart tells you to do.
And that's what happened to me. And it's been a good, it's been a good ride. And this year is looking like a, you know, a year of change. Which will be stressful. But quite frankly, in our own spheres, I don't know how much is actually changing, right? You know what I mean? Like, we can control that change, and that's, that's The markets seem to be responding.
Yeah. Interesting. Today is a big day. Yeah. Can you just talk about that a little bit? Right. So inflation not being Inflating? Yeah. Inflation not being higher than expected. Expected gives Wall Street the short term job, jolted and you know, adrenaline thinking, Oh, maybe the federal come back and save us.
But one of the exciting things we're talking about at our firm is that maybe we're getting off of the the the junkie that is the federal reserve. Right? Maybe we're getting off the drug of thinking that lower interest rates are going to solve all of our problems. Maybe we're going to go back to more fundamental than companies that are profitable.
All right. And that's great because of the large number of very profitable companies with very high forecast for their earnings growth that are out there in the world right now to invest in, you don't just have to chase the ones that did well last year. So yeah, it's, it's been good. And I think that in large part, what I'm talking about rings true.
I think companies are excited about increased productivity due to technological innovation and the chances of being able to implement that in the near future, really exciting. Really exciting. So it's a good time to be a long term optimist. Yeah. Great. Good topic. Thanks for bringing that up listener.
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