E conomic indicators are up and the stock market is down. Is that a major surprise? Let's hope it is only a market correction from the buildup in 2013 along with the Federal Reserve's decision to pull back on its qualitative funding program (however it works!). If the correction continues, however, concern will soon shift to a view the market is an advance prediction of a downturn in the economy. This would be difficult to accept because most of us believe the economic upturn is past due and that it should occur before there is a downturn. I see the economy as a conundrum. The growth of small business is the age- old predicate to strong Gross National Product (GNP) advancement and higher employment. Consumer spending drives GNP. The more job creation — the greater consumer spending. The problem with consumer spending is that it typically is financed by high-interest credit card debt; and, while the economy grows, the con- sumer's savings are traded for high credit card balances. Creating the jobs to fuel growth requires the growth of small business, which is derived from the American dream to "be your own boss." Small business is funded by home equity loans and SBA loans (government-guaranteed loans). These loans require col- lateral — typically equity in a home as a pledge of security. Without equity, there is no collateral to support the loan; and banks will not grant loans without security. If there are no loans to spur small business expansion, there will be no sig- nificant job expansion and then no sustained growth for the economy. While real estate values increased in 2013, there is still a dearth of equity in most residential homes. The alternative for funding is an unsecured loan, which, in the small business arena, is practically lim- ited to small business credit cards. We are seeing an increase in this type of loan, but the problem here is that the user of such a loan faces the same old disastrous result of any credit card — the high interest and liberal payment terms make it too easy not to pay it off and then debt becomes the rule, not the exception. Before you know it, you can't service the debt. If a home equity loan or SBA loan is not an option, you're better off borrowing the money from family and friends. Pay back the debt over five years, with market interest on a fixed monthly basis. We need your entrepreneur- ial spirit to create jobs so con- sumer spending can drive the economy. But don't be the sacrificial lamb. Your job is to succeed. Saddling yourself with credit card debt is not the solution. You need to avoid this on both ends, as a consumer and as the owner of a small business. While incurring the debt may help the economy, it will harm your future. If the only way you can start the ven- ture is with funding via a small business credit card, should you do it? The answer is maybe. You need to assess the risk care- fully. If you are otherwise collectible and have assets, you need a backup plan that preserves your assets in case you fail. The need for the backup plan is true in every key decision. Should I hire the new sales- person and expand the business or pur- chase that piece of expensive equipment? If you can cover the downside with Plan B — the backup plan— then you are ready for Plan A. ❑ Ken Gross is an attorney with Thav Gross and host of The Financial Crisis Talk Center show that airs weekly at 8:30 a.m. Saturdays on WDFN 1130 AM, "The Fan," and 11 a.m. Sundays on MyTV20. • H E F OR M AT I 0 N 0 F SCHECHTER INVESTMENT ADVISORS, LLC LED BERNIE KENT JD, CPA, PFS BY: JOHN STEIN MBA, CFA Schechter Wealth, an investment advisory and advanced life insurance design firm, is expanding its investment services and we're happy to welcome Bernie Kent and John Stein to lead the team. Nationally renowned financial planner Bernie Kent spent 32 years at PricewaterhouseCoopers, where he was the Midwest regional BERNIE KENT JD, CPA, PFS Chairman, Senior Advisor Schechter Investment Advisors partner in charge of the personal financial services group. John Stein, a former director of PwC's Investment Advisory Practice, has more than 17 years of investment advisory experience. JOHN STEIN MBA, CFA CEO, Senior Advisor Schechter Investment Advisors SCHECHTERWEALTH Knowledge Creates Opportunity' 2 4 8 . 7 3 1 . 9 5 0 0 I BIRMINGHAM, MI I NEW YORK, NY I WWW.SCHECHTERWEALTH.COM For information about registration status and business operations, please consult Schechter Investment Advisors' Form ADV disclosure documents, available on the SEC's Investment Adviser Public Disclosure website at www.adviserinfomoapv. 44 February 27 • 2014