The State of Small Business
by Steve Strauss on September 2nd, 2008
Q: Steve, what is your take on the state of small business right now? And if small businesses are having as much of a hard time as it seems, what are they doing to break out of the doldrums?
Rick
A: If I had to choose one word to describe small business right now, it would be unease . If I had more words, they would be nervous, retrenched, and cautiously hopeful (alas, we are usually hopeful, even when there is little reason to be.)
Although my pessimistic perspective is inherently subjective, even objective measures point to the same conclusion.
- The NFIB May, 2008 Small Business Economic Trends Report shows that small business optimism to be at its lowest level since the 1979 oil embargo.
- Warrilow and Co., a savvy surveyor of the small business marketplace, found that only about 40% of small business owners were optimistic about their own sales, and far fewer were optimistic about the economy generally (27.5%)
The problem small businesses have is that, very often, we are at the mercy of much larger business and grander economic forces. There is little you can do if, for instance, a big corporation with whom you do business decides to terminate your services in effort to cut back.
Starbucks can close 600 stores and save a wad of cash when things go south, but all we can do is to try to somehow wring out a tad more savings by tightening the belt and to keep hustling for business.
No, it is not my style to sound so dire, but these are indeed tough times for small business. The good news is that there options. As my wife always tells my daughters, “There’s always a solution.”
I recently attended a small business seminar hosted by the aforementioned Warrilow & Co. wherein I listened to a variety of small business owners share their strategies for success in lean times. I came away impressed. Here are a few ideas that you might want to consider:
Look for new clients : If your regular folks are buying less, start looking for customers who can buy more. One owner said, “We leave open the option to pursue business opportunities outside the norm.”
Remember when you first started in business and you used the shotgun approach to customer acquisition, that is, you tried hitting everything, hoping to hit something? That may be needed again. Open your mind as to what is possible, try a bunch of new things, and see what sticks.
Spend money where it will do the most good : Cut back where you can, but consider increasing spending in areas that offer the greatest potential for increasing sales. That may mean more advertising, public relations, business development, buying leads, pay-per-click, or sales training.
Increase your shoestring marketing : There are many ways to get the word out without breaking the bank. All it takes is some creativity and follow-through. One owner at the conference said, “We email and send out postcards more, instead of driving around, meeting potential clients, and giving them brochures.”
Treat existing clients well : A different tact is to take extra special care of those clients who are already your customers.
Add line extensions : Creating additional, related, profit centers means that when one part of your business is down, another will probably be up. A chiropractor added a wellness line that significantly increased revenue in only three months.
Look for government contracts : Even in down times, governments generally, and the federal government specifically, still have contracts that need to be fulfilled by small business vendors. Business Matchmaking is one of many programs that help you do that. A Google search will reveal many more.
No, this is no easy time to be in business for yourself, but with a little ingenuity and some hustle, you can keep things going.
Today’s Tip : One last strategy that I thought was interesting was from one seasoned entrepreneur who looked at slow times as an opportunity to experiment. Whether it was offering a new product or trying out a new advertising campaign, he used down times to refine strategies that can be rolled out in a bigger way during the boom times.
