Small Business: Meanwhile, Back in the Real World

As the numbers roll in -- jobs lost, financial markets fall, bailouts -- I'm sitting in the middle of a 40-person company I started in 1988 and wondering, as I assume so many others are, how bad this is for other small businesses.

I've been through recessions before. I was looking for my first job in 1971, buying our first house in 1982, and moving a company in 1992. In 2001 I laid off five people (of 33) in a single day.

That one was really hard. Our sales dropped steeply when the tech stocks fell, and we waited too long, got into real trouble, before we finally bit the bullet and cut the staff. What I discovered then was 1.) the 28 people who didn't get laid off were relieved to see we were dealing with the problem; they thought our response was long overdue; and 2.) hard as it is to lay off several people at once, it's not as hard as laying off an individual. An individual feels personal failure, but when it's a group, it's the company, or the economy, that caused it.

Now in this recession, which is certainly the worst in my lifetime, there's so much we don't know. I've read a lot of the available information of course, but it's pretty hard to gauge. For example, I've been watching as the official stats showed half a million jobs lost last month. And I followed as ADP showed small businesses increased jobs in September, but lost them in October and again in November. At the same time the SBA released a report showing that small businesses generate 80% of the new jobs.

But things are not that simple. Scott Shane asked Can Entrepreneurs Fix the Job Loss Problem on Small Business Trends earlier this week, and his answer is "the scale of the economic downturn is so large that we can't offset it just by boosting our level of entrepreneurial activity."

And then there are surveys like this one, which supposedly shows that 43% of small businesses aren't feeling the recession, and 4% say they're better off. Which is why I'm suggesting the survey we're going do to here.

One of the most important realities of small business in this country is how diverse and disconnected we really are. Small business owners don't vote alike, don't think alike, and don't respond to business crisis alike either. Four out of five small businesses are personal businesses with no employees. They're freelance writers, business consultants, graphic artists, designers, real estate brokers, butchers, bakers ... well, you get the idea.

While economists and politicians give "small business" credit for creating jobs, and there are several well meaning public agencies and business groups, we're still mostly out here in the trenches minding our own businesses, worrying, and wondering how bad things are and how bad they'll get. And when they'll turn around.

So I'd like to ask any and all small business owners, and yes definitely including those 21 million personal businesses, how are you doing? How bad is (or isn't) it?

With that in mind, please join me in collecting some real information, one person at a time, on what's going on throughout the economy with all those businesses that aren't big enough to attract news media attention, but are still there and, presumably, hurting as much as Wall Street and Detroit.

And to make this work, we want to start with the basics: Do you own the business? Do you have employees? How many people did you have six months ago, and how many today? What do you see happening to sales -- in percent growth or percent decline -- next year?

And from there, the stories. Add your own story. How are you weathering it, how bad is it, when will it turn around, what do you need, what have you done, what surprised you, what are you hoping, and what are you fearing?

And we'll be tracking responses and general results, so you can check back here to see what we come up with!

CLICK HERE TO TAKE THE SURVEY

Comments

[dannielo]

If you would like a tool to manage your small business activities and Projects, you can use this web aplication:

http://www.Gtdagenda.com

You can use it to manage and prioritize your Goals (for business but also in other areas of your life), Projects and Tasks. It has a Checklists section, for the routines and repetitive activities that any business has to do. Also, it features a Schedules section and a Calendar, for scheduling you time and activities.

Some features from GTD are also present, like Contexts and Next Actions.

And it's available on the mobile phone too, so you can access it from anywhere.

[onegandolf1]

Will the survey be re opened? I missed the first one.

[zizyphus]

As a graphic artist, with less jobs these past four years, I had to take up cleaning vacation rentals. I once cleaned three two-story houses in one day, in 95 degree heat. My hands are so crippled from arthritis I can't make a fist! Carpal tunnel from setting type is another problem. But now with tourism down, the VR owners are doing their own cleaning. Plus, I just couldn't hack it anymore, too exhausting. So, I am making soap now. But just heard that a regulation will be passed that will force people like me to pay many thousands of dollars to make soap at home, money I don't have. Really not sure how I will survive the coming decade of depression. So am focusing on permaculture, growing much of my own food, and will help others learn to do the same.

[lean2green]

As usual, this post probably won't make it past the censorship dept. but I'm going to try anyway.
I'm (still) in the home improvement business. I bought a lot of canned goods when there was work just in case of this. I run my business responsibly and expect others to do the same but I'm suffering, as most because of the reckless mistakes that have been made.
I put the last of my cash into advertising, which greatly expands my market but the phone hardly rings. It's all moot now anyway as the cable (internet) is getting cut off tomorrow and most of my leads come in e-mail.
Later, HuffPost bloggers, it's been a gas.

[tailgateshirts]

go to a panera or something dude, dont let everything fail!

[twofish]

If email is all you need, you can get dialup for $5-10/month. It's slow, it sucks, it won't let you watch the skateboarding dog videos on YouTube, but it works.

[mdh6604]

Owning a restaurant in the Portland metro area puts me on the front line of consumer sentiment. I saw the first signs of today"s economic troubles in April 2007, when I lost customers who were living beyond their means in houses they couldn"t afford.
Without the "sub-prime drop-ins," I counted on my core affluent, fiscally prudent customers feeling secure. However, the recession now has them suffering job losses and decimated investment portfolios. In Oregon, unemployment has reached 8.1 percent.
Consumers not spending and banks not lending puts me in a bind " i.e., not enough revenue to cover expenses and no access to working capital to get by in the meantime. My vendors/suppliers, most of whom are small businesses themselves, suffer as I scale back orders and defer equipment upgrades.
With both ends playing against the middle, I'm closing early, conserving energy, and keeping inventory levels as low as possible to save costs. To add insult to injury, a snowstorm hit the area on Sunday, shutting us down for two days. More snow is forecasted later this week, and without the banks to extend my credit lines to help me literally "weather the storm," I'm scrambling.
Texastrixie, to reconcile your feelings, remember this: So much is at stake " my investment in my business, community, employees, and financial future. Communities live and die by restaurants, repair shops, and the vast array of other small businesses so critical to their success. We"re in it together.

[texastrixie]

I do realize that we are all in this together. That's why is so frustrating that we have been led to embrace a world with so little mix of industrial-based jobs. If we were still making things (and we had enough sense to spend a few dollars more to buy American), there would be a base of needed products (refrigerators, blankets, snow blowers) to insure that there was an economic base to support independent resturarnts and some amount of frivilous spending on hand-painted jewlery boxes, homemade flavored mustard, and getting your hair put up in an up-do for New Year's Eve.

[tailgateshirts]

We went from an industrial nation to one that just services stuff and makes up bullshit. So we bail out banks that loaned invisible money with more invisible money while those that make things suffer..... its a great world we live in

[KillTheMessenger]

Though I am not the owner of the business I work for, I can add a data point. We are doing quite well, thank you.

:-)

[texastrixie]

As I have posted to HuffPo before, many small businesses sell a product or a service that one can live without. As the housekeeping service noted, they do not sell a required service. Plumbers, small auto repair shops, and lower cost hairdressers/barbers are doing okay. Fancy food, fancy haircuts, and things you could be doing yourself - mowing the lawn, cleaning the house, washing your clothes, etc., are in deep trouble. This is not the small businessperson's fault. We have been lead to think that niche products and a service economy was the next level on economic evolutionary scale. NOT SO!

Because we have outsourced our manufacturing base, we are left with only MAC-products, and services for income. A MAC-product is the overly expensive version of what we now get from China - the fancy white shirt vs. the $5 Wal-Mart white shirt. Now as the economy faulters, we all will be rediscovering the $5 white shirt (which would have been $10 if we still made it in this country).

I am torn in my feelings about small business people. The 80% of "smal business owners" - freelance writers, business consultants, graphic artists, designers, real estate brokers, butchers, bakers - makes we want to scream at them, "How could expect to make a living doing this?" But the problem is, we lead them to believe this was a good business model, and they bought it. Unfortunately, most people are no longer buying them.

[jpditri]

You would yell at a butcher or a baker for expecting to make a living?

[texastrixie]

First off, I cut&pasted the original blogger's definition of small business people. But it still rings true. Case in point - I think Mrs. Fields' Cookies has filed for bankruptcy.

By butchers I mean people who run gourmet butcher shops who may have cultivated a client base that only expects the best - the most expensive. While the butcher can scale back on his offerings to have more inexpensive cuts of meat, he is going to be known as gourmet and expensive. Just when he may need regular people who buy hamburger they will not know to go to him, or expect him to have reduced his prices. So he too may fail.

[Tim Berry]

Yes, Trixie, but it's a sad economy, and a sad place for all, when the only businesses that survive are the ones people can live without. That's a very extreme vision, hardly what any of us wants, no?

[23000Days]

Tim, since your survey will include number of employees, you could break the results down into business size by that number. Maybe groups like 0 - 20, 20 - 50, etc.

[Tim Berry]

Thanks 23000 we're working on results now ... more than 500 responses ... they do go all over the map. We're looking forward to sharing more in the next post. Tim.

[VoteforPedro]

I'm plugged into a number of good networks for people who run their own businesses. Let me tell you that I haven't seen this much creative thinking in a decade or more.

"Nothing concentrates one's mind so much as the realization that one is going to be hanged in the morning!" Samuel Johnson

Sammy was right.

There's a lot of interest in collaborative business models suddenly which is much more of a European and Japanese way of doing business. Google "keiretsu" and "industry aggregation". These models help to reduce operating costs and increase revenues. I'm seeing entrepreneurial lone wolves suddenly singing the praises of team work with other owners and not just their employees.

We're looking ourselves. Change is coming whether we want to admit it or not.

It's scary out there.

[ShawnGrey]

Just when I thought the world had forgotten about us. The little guys. Where's our bail out? Yes, some are doing fine...for now.

[Trebor1]

Is anyone involved in writing this article interested in defining what constitutes a "small business?" Is it under 20 employees, or uunder 200? Is it gross annual sales of under $500,000 or under $5.000,000? I guess if no one defines it, anyone's statistics can be interprested any way the author wants.

And, if I may, I'm tired of hearing how business creates jobs. That is simply Chamber-of-Commerce baloney. CUSTOMERS create jobs. The reason no one is selling porcupine sandwiches is because there is no CUSTOMER DEMAND for them. Let them become the new "health food" of the left coast, and someone will offer them for sale BECAUSE THERE IS CUSTOMER DEMAND FOR THEM.

[Tim Berry]

Trebor1, that would be me, I wrote that post.

Different agencies releasing statistics have different definitions, just as you suggest. I've seen some research that defines companies with fewer than 500 employees small businesses, but to me, a company with hundreds of employees feels pretty big. And this wide range of definitions is part of the reason we get so many different and conflicting results.

I think this is one problem that just plain comes with the territory. And it makes the research and survey data sketchy.

On the other hand, whether it's 5, 50, or 100 employees, or no employees at all -- which is the case for 20 million one-person business -- there is still a whole lot of businesses out there, and a whole lot of people worried about their businesses.

When I posted this I wasn't out to have some definitive answer about the state of small business. I just wanted to ask the right questions.

[LeonBNJ]

What you might see is small companies not hiring replacements for people who leave, reducing staffing by normal attrition. For some small businesses, unfortunatly they had been hiring illegals as day workers (especially in construction) so there may be few jobs really lost in those businesses. Some may hold on to staff they have invested time, money and training in, or have good contacts or skills even if not enough work as don't want to go through those expenses again or having to find qualified persons when the economy improves.
You will have some small businesses that will continue to do ok despite the economy as there will often be a base of continuing customers. Still, I suspect that if the auto plants shut down for extended periods of time, or are shut down permenantly to reduce capacity, or financial services companies 'right size' then small businesses in those towns will suffer the worst.

[AZ AF VET]

I was working part time for a family owned vending business. I had to take time off in July and was never able to go back. Many of his clients were in the construction business and we all know what that means. His sales are down by 50% since last year at this time. As a result I had to let my yard maintenance guy go and cut my pool service visits in half. So the trickle down theory really works!

[billw8017]

If we look at this from the point of view of the trickle up theory, we see people saving money by reducing their vending machine buys and the pain rising with by blows along the way. The unemployed guy can be his own yard man and pool maintenance worker, and, in this regard, no addition is made to unemployment, just a change of personnel.

[NWReader]

I'm a designer for the handcraft market, and business is fine. I've been talking to my connections in the industry and they're all doing well, too, including the retailers. We think people are nesting and making holiday gifts. That said, I may be cancelling some travel plans; the community where I planned to teach a workshop is hard hit, and if they can't afford the class, they'll cancel or feel guilty for being there, and it won't be fun for anyone.

[vippy]

And in Texas our glorious governor added another tax to our small businesses and then he thinks he
can ask for a third term LOL.

[billw8017]

Yes, eliminating taxes is an excellent idea. The correct answer to high gas prices is a tax holiday. The answer to health care costs is a tax refund. All government services should be free. If kids want libraries, schools or crossing guards, let the children pay for those things.

[Kache]

And we could all get 25% better gas milage if they'd just do away with those damned stop signs. We could all average highway milage insead of city milage if we just run our streets and highways the way the banking industry has been run.