Wow, is Europe expensive! I've just returned from a wonderful trip to Italy, Ireland, and London, and while I had a terrific time, I experienced firsthand the effects of a weak American dollar.
If you're not planning to attend a cooking course in Italy (which I highly recommend, by the way), what does a weak dollar have to do with you and your business?
Quite a lot, actually. Let me simplify -- or oversimplify -- the economic effects of a weak American dollar to you:
* As the dollar gets weaker, it costs more to buy foreign goods, including oil. Thus, the price of everything America imports increases, as does the cost of shipping and energy. That means the raw materials and supplies for your business get more expensive.
* Because the dollar isn't as attractive as other currencies to foreign investors, and America depends on such investors, banks have to offer higher interest rates. That means upward pressure on interest rates for all loans, including loans to small businesses.
Of course, proponents of a weak dollar believe it spurs foreigners (and Americans) to buy more American goods and services. That should ease the trade deficit and be good for American businesses.
Whatever the long-term consequences, you should consider steps to minimize the effects of a weak dollar on your business:
* Seek European customers
From a European standpoint, everything in America is on sale. If you've been considering exporting, especially to Europe, now's a good time to exhibit at a foreign trade show.
If you're in a travel-related industry, reach out to international travelers. List your bed and breakfast on international travel websites, contact foreign travel agents to tell them about your guided tours, and so on.
* Seek American suppliers
If you've seen your prices from international suppliers rise, now's the time to pick up the phone and ask American companies for bids.
* Seek American customers
Do you compete with international suppliers -- especially European suppliers -- for American customers? If so, now's the time to compete aggressively, as your prices may seem more attractive.
* Change your travel plans
If, indeed, you're planning a family vacation to Europe, recognize that you won't be bringing home a suitcase of souvenirs. Perhaps it's time to see the Grand Canyon or San Francisco instead.