Posts Tagged ‘small business’

The Value of Small Business to the US

Tuesday, July 14th, 2009

Recently The President of the U.S. received a report entitled:

2009 - The Small Business Economy
A Report to the President

This is an annual report complied by the Office of Advocacy whose charge is to conduct and solicit research documenting the importance of entrepreneurship in the American economy and highlighting policy issues of relevance to small firms. This report contains some very interesting and informative facts. Among them small businesses in the U.S. provide about half of the nation’s private sector work force, and provide half of the nation’s nonfarm, private real gross domestic product (GDP), as well as a significant share of innovations.

In the introduction, the authors point out:

Small businesses were challenged in many ways during the year, with many struggling to make ends meet. Their top concerns in the middle of 2008 included poor sales and inflation; by year’s end, access to credit was a major concern. The nation’s job generators were forced to reevaluate their businesses, lay off workers, and postpone plans to grow their firms.

This is nothing new to any of us who are actually out in the trenches fighting the day-to-day battles. The report goes on to cite the current challenges faced by small firms, including access to capital, the cost and availability of health insurance, retaining a quality work force, global competition, and concerns about taxes, regulation, and federal procurement.

It was also noted small firms faced difficult challenges in the extremely distressed financial environment. The credit freeze in the short-term funding markets had a devastating effect on the economy and small firms. By late 2008, the normal production of goods and services had virtually stalled. While the first half of the year was largely un-effected by the changes in the financial sector, by the fourth quarter loans and credit to small businesses virtually stopped.

One of the most interesting observations was that small businesses can be divided into two groups, employers and nonemployers. The later would be single owner/family operations that do not employ outside workers. Overall, the researchers noted how the typical nonemployee firm and employer firm differ. The most immediately obvious difference is their size and number. Employers are larger operations, but nonemployers outnumber employer firms by a three-to-one ratio.

When it comes to the impact of foreign competition on small businesses several factors come into play. Small manufacturers, by the nature of their size, are less able to protect themselves from foreign competition than large manufacturers. Overall, the study fount that increased international pressures in the form of currency exchange rates lead to increased exit rates among very small manufacturers (those with fewer than 20 employees). Slightly bigger manufacturers (20-499 employees) are less sensitive to changing conditions.

While none of this is news to those in business, at least the President is now somewhat aware of the plight of small business. Whether anything can be done to improve the situation remains to be seen. The stimulus efforts to date have been weak at best.


How’s the Economy Treating You?

Friday, October 24th, 2008

The last couple of weeks have been pretty scary. Between the ongoing political campaign and the financial markets, very unsettled. People are distracted. I see it in my employees as well as my customers. When I talk to my clients I hear one of two things. The first is that business is way off and it doesn’t look good for the future. I get this alot from the contractors and builders as well as the bankers. Imagine that! The second is, “We are slammed.”

Why is there such a polar difference? On the one hand, you’ve got people who are waiting for something to happen. These are the same people who will always find someone to blame for their current less than optimal situation. If you fall into this category, you can’t blame luck, the stars, the economy, or anything else. You are essentially saying your future is predetermined by your circumstance. In good times, you do well. In bad times, you don’t. You can hope all you want for the good times to come back, but there is no guarantee when that will be. Can you afford to hold out for however long for them to get better?

The second group are the ones that stand up and take responsibility for their direction. They’re the ones who make it happen. History shows the economy is cyclical. There will always be ups and downs. They’ve figured out that it’s their responsibility to even out those cycles, or at the very least eliminate the downside.

The things they do and the plans they make are entirely focused on this concept. We’ve seen on Wallstreet how brokers make money on the upside AND the downside (that’s why they call them BROKERs, we end up broke dealing with them.)  They have a whole bunch of tricky programs to prosper while the rest of us suffer. It’s our own fault. You can’t blame them if we’re too stupid to figure this out for ourselves! I don’t know about you, but I’m mad as Hell and I’m not going to take it anymore! When you put your trust and future in the hands of the government, the banks, or the corporations you’re asking for trouble. Do you honestly think they have OUR best interests at hand? In a pure and honest world I would say yes, but we all know  we don’t live there anymore. It’s been every man for himself for quite some time.

Now, don’t get me wrong. I’m not advocating just looking out for yourself. Quite the contrary. I’m advocating you travel and work in circles of people and company where you really KNOW who you’re dealing with. None of the people mentioned in the above categories has the faintest idea of who you are or what your circumstances are. This gives them insulation against the extreme anger that’s directed toward them. I mean, just look at the town hall meetings both of the candidates have been holding. Both are talking bailout for the big corps and banks and “protection for the little guy,” but who are they kidding? We all know all this will be forgotten as soon as the election is over, regardless of who wins.

The only thing we can do is to take it back, one person and one small business at a time. While just one person or one business will not make any difference, collectively we can kick some sanity back into all of this. This all reminds me of the movie A Bugs Life (Pixar 1997). It’s time we realize where we all fit into the big picture. There are way more small businesses employing multiples of what the corporations employ and yet we’re paying for all of their greed and corruption. This isn’t anything new.

Enough of my rant on this for  a minute. The point is this. Instead of being paralyzed by the negatively and bad news, DO Something. Take it back one employee and one small business at a time. Anything  we do that’s better than where we are today is an improvement. That’s really what this site is all about, looking at things and doing things differently for better results.

Enough, I’m going to lunch. . .