Times Are Still Tough For Small Business – What To Do Now?

So, it’s 2011. We’ve wiped the holidays from our eyes and gotten back to the business of the day-to-day challenges of work and life. When we look around us it seems that the general consensus is that things are, in fact, getting better. The stock market has regained much of its previous luster. New jobless claims are lessening. Economists have declared the recession over for months now, and it finally seems that there are some signs to reinforce that position. But, when you talk to the average small business owner they’ll tell you they are hardly out of the woods just yet. In fact, despite the success a lot of larger businesses are demonstrating with solid earnings reports and beating analyst expectations, many smaller businesses are still finding it necessary to make large cuts or even close shop altogether. So, why the dichotomy? What is it about getting out of this recession that has played so well into larger businesses hands and yet has continued to plague so many small businesses? Well, the answer lies in how these respective businesses function. Let’s start with larger businesses:Large businesses, especially those that are public, are concerned with one thing: profits. While this is a big contributor to the negative “faceless corporation” stereotype many attribute to big business, there are upsides. One upside is that it forces large business leaders to utilize the hierarchy they have in place to force the gears of the organization to become more efficient, and moreover to do so as quickly as possible to weather the storm. Sometimes this means layoffs or restructuring, but the end goal, and often the end result, is the same. Quick and decisive action, which can often be painful, but leads to faster recovery and better preparedness for improved economic times when they come.Compare this to the average small or medium-sized business. Many smaller businesses are run by founders or owners who are emotionally tied to the success of their business as well as to their employees. This makes the tough decisions of cuts, restructuring, or strategic realignment much harder. The general mindset in smaller firms is “if we keep doing what we do well, but do it harder/better/faster, we’ll pull through this.” While this may work for some, the sad truth is the nose to the grindstone approach is often not enough, especially in the midst difficult economic climates such as the one we have endured the past three years. Many have followed this philosophy to their own demise. Those that continue to exist are often still hampered by it.This is not to say that small businesses and their management should be ruthless and institute multiple levels of hierarchy to enforce change – quite the contrary. Small businesses’ greatest asset in the marketplace is the ability to get a unified message to every corner of the firm quickly and enact strategic change rapidly. Clearly, a 10 person firm can alter its strategic direction much faster than a 10,000 employee firm. Thus, small businesses are still left with some hard choices, but are also presented with some potentially large rewards.For those small businesses that still need to make cuts or restructure to reach or regain profitability, this is a great time to do so. Unemployment benefits are still very liberally given federally and by most states. Further, the job market is not too bad these days. So, those unfortunate employees who do get let go are far more likely to get a good job quickly now than a year or two ago.For those that don’t require cuts or restructuring, but need some strategic adjustments, this is a wonderful time as well. If the changes require financing or investment, this is a good time with low rates, capital freeing up, and optimism for the near future. Alternatively, if the changes are to be purely internal, most workforces are keenly aware of the difficult times everyone has been through, and there is more appreciation for having a solid paying job now than there has been in generations. As a result, difficult messaging, regardless of how bitter a pill it may be to some, will be better received now than nearly any other time.On top of all of this, is the fact that many small business owners and leaders are closely tied to their business and its employees. As such, it isn’t always clear to them what actions are needed and what ideas for change are coming from the head versus the heart. Consequently, small business consultants are of incredible value these days as the timing for change is very good, but the outlook is not necessarily that clear.Of course, there is always the possibility that things get worse economically. This is why, once again, there is no time like the present for small businesses to take action. Better or worse, getting new strategic messaging across, enacting needed changes, and making strong moves toward profitability is an opportunity that small businesses have now, but is not guaranteed in the future.