Financial Meltdown's Effects On Tech, Growing Companies Still Unclear

There was historic chaos on Wall Street today, as Lehman went bankrupt, Merrill Lynch got bought by Bank of America, and Washington Mutual and AIG teetered on the brink of who knows what. Unfortunately, the effect of these events on the overall economy -- much less technology and growing businesses -- is still impossible to calculate. But that won't stop us from trying to predict the future.One thing we do know is that this is a real crisis. Even the Wall Street Journal says so. If it was just Lehman, that would be one thing. But Merrill is the company credited with "bringing Wall Street to Main Street." And AIG and WaMu's problems speak directly to lending to small businesses. The stock market shedding 500 points today doesn't help either.

Taken together, for good or ill, this is going to remake the way high-finance works in America. And you can bet those changes will quickly trickle down to small and midsize businesses.

I'm no economist, but here's my quick take on how this is likely to affect growing companies.

1. General economics. The crisis will no doubt affect the general economic situation, at least somewhat. Al the press coverage -- like this blog post -- will no doubt scare some consumers and businesses into cutting back, worsening any direct economic impact. That will make business more difficult for all companies, and potentially life-threatening for undercapitalized outfits without the resources to ride out a slump.

2. A cash crunch. Real estate loans, not small business loans, are what caused this mess, but you can bet that all kinds of loans will be more expensive and harder to get, at least for a while. It might be sensible to keep some extra cash on hand, or lock up financing and line of credit options while you can.

3. Extra pressure on startups. As overall nervousness increases, entrepreneurs and startups will face investors looking for even more clearly defined paths to profitability and payback.

4. Surprising opportunities for the bold. The pressure is already forcing some entrepreneurs to give up, according to the New York Times. Not a good thing, obviously, but also less competition for those with stomach to stay in the game. Historically, smaller companies are the first to take advantage when the economy begins to recover, and that's likely to be the case again. But trying to time the recovery and jump in at the last minute is a fool's game. If you want to be there for the upswing, you have to weather the troubles.

Oh, and here's one more piece of fallout that's already started. Obama and McCain will both claim they can fix the problem if we elect them.

Would that it were that simple...

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