HAS THE GREAT RECESSION OF 2007-2010 ENDED FOR SMALL BUSINESS?

My business serves only small businesses and we have seen many of them close their doors. The trend has slowed but we still loose one or two a month. October '09 was the worst with seven closures. However we are adding clients who are looking at saving money on answering services, phone services or staff and we are actually up about 12% since this time last year.

I wrote a brief blog about this same subject on my website http://www.RenCarlton.com. I think it applies pretty well here:

Based on my conversations with fellow entrepreneurs and clients, I have come up with the following reasons:

* Credit is Still Tight: Banks are still not lending money the way they should be. I am dealing with multiple client situations that are simply ridiculous. One in particular, where the closing was supposed to take place in the fourth quarter 2009. This financing deal has still not closed as of the writing of this article (May 2010). The deal is strong. The company involved is strong. But the bank keeps making excuses to prolong the process. Lack of credit is strangling the small business owner.

* Cautionary Spending: Consumers and business owners may have learned their lesson too well. Consumers are spending less, saving more, and maintaining some degree of financial flexibility. I have also found that most business owners are still uncomfortable with spending, especially if it requires a long-term financial commitment. Although this ideological shift may be a good thing, this is making it difficult for entrepreneurs to sell. If business owners cannot sell, they cannot hire, purchase equipment, etc.

* Lack of Bailout: As far as I know, most small business owners did not receive any direct benefit from the federal bailout/assistance programs (aside from some modest tax credits). None of the business owners I know received any funding, purchase orders, financing, etc. Obviously our country has experienced a horrible recession. Since small business is the economic engine that drives America, why does Washington continue to ignore the needs of the small business owner?

All that being said, I do think we are in a recovery. But until the issues above are dealt with, the recovery process will be slow and painful.

I agree that many are slowing recovering from the recession while others are slowly dying out. A business owner or management should really invest in planning ahead for times of uncertainty. Planning ahead through strategic planning and staying focused can help a business make it through the rough times. Some economist stated that the recession ended mid-last yr & the recession isn't over until the NBER declares it but the people see differently.

If the recession is determined by NBER to have ended last year, the NBER may take their time in dating it. There is some debate as to whether the recession is over. Sometimes in times of uncertainty and before, a company can learn to improve finances & saving more, diversify services, improve client / customer relations, improve their marketing, invest in strategic planning, risk management planning etc... It all depends on the strategy that a company decides to use.

I agree with everything Ren says. Here in the UK we now have a new government who have inherited the worst financial crisis we have ever seen, the way out is like previous recessions through small business moving forward yet the banks will not lend.

I do not think the recession has ended at all, it may have slowed but unless banks lend then I fear we could see the UK slip back again.

I am a Commercial Realtor and that business is getting WORSE not better, so I bought a Little Coupon Book franchise in northern Georgia - an area hit very hard by this depression (sorry, recession)! We are doing well and expanding after 7 months, but only because 75% of the shoppers are now using coupons and our little book is based on using coupons to save on food and other services that we all still need. I truly believe that we will NOT come out of this mess until we (the small business community) are left alone by big governments so we can function again.

The SMC Business Councils (www.smc.org) published its annual Small Business State Opinions Survey. SMC is a trade association that represents small service, manufacturing and commercial businesses in southwestern and central Pennsylvania. This quote from their news release tells their pain points: "The number-one concern among SMC members is the high cost of health care: 71% said it was the most severe business challenge. The economy was cited as a severe challenge by 45% of the members who responded to the survey. Other top concerns were personal and business taxes, and compliance with government regulations. More than 70% of SMC members said high taxes were a moderate to severe challenge to their businesses."

Here's a link to their news announcement: http://www.smc.org/pressrelease030210

There's a full article in their Mar/Apr magazine. (I don't have a live link to it, so can't post it, but if you want more info, please contact SMC directly. Contact info is on the news release.) Full disclosure: they use Ennect Survey to collect and process their data.

Since I decided not to participate, last year was my best year ever and this year is even better. My sense is many small businesses failed to have written plans of actions reinforced by written goals. I know this to be true because 2 months after 9/11 I spoke to over 100 small business owners and even thought 100% admitted to being affected from that terrible day only 5 people had returned to their business plans. Two of those five were my clients.

Years ago I came across a story (darn it because I did not save it) about salesmen who sold electric generators to farmers who did not have electricity. In the words of Henry Ford - Whether you think you can or you think you cannot, either way you are right.

The recession is far from over and for the reasons that Ren stated. Foreclosures are still a huge issue as lenders try to organize themselves out of that incredible mess. The next wave will be commercial real estate, although it's already started. What's going to happen when the lenders flood the markets with all the homes they have in inventory, that will certainly negatively impact the market.

I've said this for a long time, jobs are going to disappear permanently, we live in a global economy yet we still behave like we are isolated. Interesting to see Ford motor company make the turnaround, I think they've finally figured it out.

Leannne, you make an excellent point about having or referencing ones business plan, you need to align your tactics and strategies based on the design of your business model. Even that being said, I don't believe it will help most individuals. Consumers are not only cautious but continue to be less trusting. If you don't invest in the relationship, you'll struggle getting the sale or getting repeat business.

With all the materials and books that have been written on Customer Service, there are still only a handful of companies that get it, and that in itself is another issue.

I also believe that outsourcing will prevail in the very near future, it's building momentum. Executives are going to quickly realize that there is no need to have large corporate offices with multiple departments. Outsourcing is not only less expensive, but the expertise is significantly better.

Not only is it far from over, it may well get worse. There are many economic indicators that we may actually be facing a deepening recession. Consumer confidence is down which translates in too slow a growth to be able to generate new jobs. In spite of all the money available to guarantee new SBA loans, lenders are not lending. Money for that is stuck in Congress. Large employers are still laying people off with no end in sight.

However, the situation has also created some opportunities. For instance, many parts, product and services suppliers to other businesses have been deliberately running off their smaller customers and/or have cut down on customer service. Those opportunities for a small business to become the supplier is greater if you focus on smaller businesses and providing great customer service. You help your customers grow or even stay in business and you can grow as well.