From RBR.com:
Small business needed to drive recovery
One of the keys to getting through tough economic times is putting people to work so that they are free to spend money and do their part to enrich the economy. That is certainly the case this time around, as unemployment approaches double digits (and has been there for awhile already in some states). And since the unemployed drain resources rather than contribute them, the positive effect on the economy is doubled when a citizen goes back to work.
According to the Small Business Administration, the companies it caters to were the engine which led America out of the recession of the 1990s. Companies with fewer than 200 employees put 3.8M people to work compared to only 500K for big businesses.
The bad news right now is that small businesses are getting hit especially hard by the current economic woes.
"We're struggling,” says National Small Business Association Chair Keith Ashmus. “Despite several economic stimulus packages and lots of talk, only three percent of small businesses reported a positive impact of the stimulus bills on their business."
With all due respect, all businesses will benefit from stimulus, but only after it has started producing a significant number of jobs. The newly employed will be in charge of spreading the cash around, and theoretically, it should eventually help float all boats. But its greatest impact is yet to be felt.
But trouble in the small business community is double trouble for broadcasters. Not only do small businesses make up much of the broadcast client base, many – in fact most – broadcasters are also operating a small business in their own right.
The polls say ouch!
NSBA has put out a poll of its membership, including results from December 2008 and July 2009. The number depict a shifting view of the future, some of it good (remember how utterly bleak the economic news was back in December?), but there is little to suggest that small business is ready to throw a rope to the ailing economy and haul it into prosperity.
Only 7% of small biz owners are looking for expansion in the next 12 months. That’s up from 3% in December (woohoo!). On the flip side, 42% expect further recession. In dark December, that number was much worse, though, at 64%. At least in July, 51% see a flat year ahead.
NSBA asked how the current economy is perceived compared to five years ago, kind of a silly question. We’ll get to what’s interesting about it in a moment. First, though, 75% said it is much worse in the July poll, up from 64% in December. 19% say it’s somewhat worse. 3% say the same, and 3% -- we’d guess members of the rose-colored glasses and glasses half full industries – say the economy is somewhat better! Here’s what’s interesting, or at least a relief and tribute to the general level of sanity in the small business community: Nobody said the economy is much better in either month.
Taking a brief look backwards, 62% saw sales performance decreases compared to 22% enjoying an increase; and 41% shed employees compared to only 9% who increased staffing levels.
Finally, here are snapshots of the same categories for the next 12 months: 50% expect gross sales to decrease against 30% expecting an increase; and 26% expect further staff cuts against only 13% expecting to hire.
Tips on surviving the downturn
A group of finance professionals recently offered suggestions to help small businesses weather the storm. "With revenues down, small business owners must adjust their cash flow and growth plans and adapt to the new normal," says Clyde Wyatt of the Navigation Financial Group. They suggest focusing on three areas.
Number one involves reworking loans and agreements with vendors. Credit lines and mortgages are a good place to start. Arthur Cooper of Cooper McManus noted, "It's possible to reduce a small business loan at 6 to 7% down to 2 to 3. There are no negative credit report repercussions for requesting better terms. In fact, a lot of the lenders would rather secure their portfolio by adjusting terms instead of looking at possible future defaults."
Added Don Patrick, Integrated Financial Group, "Times are tight all over, so try to re-negotiate contracts with vendors, too. In that battle to stay afloat, some providers voluntarily reduce their costs rather than lose business."
The second area involves controlling costs. Everything should be on the table for consideration -- salaries, bonuses, office space, vehicles, and technology included. New paths should be considered to meet existing goals. They suggest the examining employee health care as an example – considering more cost-effective plans, or plans that shift a bit more financial responsibility toward co-pays, etc. "There's a substantial cost differential between the top traditional health plans and high deductible/HSA plans, so I encourage small business owners to evaluate their options," says Wyatt. "Investigate professional organizations that may offer members the benefit of purchasing health insurance at a discounted group rate."
The third area is focusing on your most valuable resource: employees, especially if they are bearing the brunt of some of the necessary changes coming under area two above. "Talk to your staff about your efforts to reduce operating costs," says Patrick. "Often the best ideas for making a company lean and mean come from the folks working in the trenches. You may find you have employees who would prefer to work part-time, thereby enabling you to avoid layoffs. To encourage cooperation, offer rewards for effective suggestions."
Downtimes are also said to be a good time to deepen relationships with existing clients, reach out to new clients, and experiment with new products and other tweaks to the business which may pay off when things improve.
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