U.S. Small Business Impact
How do U.S. small businesses impact the U.S.? There were 27.2 million small businesses that employed sixty million people a few years ago, and it has grown since. Small businesses are not only the largest employers when compared to medium and large businesses, but firms with fewer than twenty employees pay 36% more in regulatory costs per employee than larger companies (US Small Business Administration).In summary, such a burden makes it difficult for small businesses to get off the ground.
Small businesses are absolutely critical and fundamental part of commerce, jobs, the economy, and a nation’s financial health. James Gattuso, Heritage Foundation Fellow, states it right on: “The impact on small businesses, moreover, goes beyond the direct costs of regulation on their own activities. Small businesses, like individual Americans, also pay ‘regulatory taxes’ in the form of higher prices for goods and services, reduced economic activity and hindered innovation caused by excessive regulation generally.” (Andersen, Erick).
Surviving in a Recession Small businesses are having a tough time weathering the economic difficulties, disruptions, global changes, and recessions that have been taking place. There are few places to cut in the smallest businesses, especially when credit is scarce.
According to W.P. Carey there are ways to improve the odds of small business success by paying attention to long-term strategy. Amy Hillman says, "Small businesses need to step back … decide what is the core of their competitive advantage"? In all reality, some of the best companies and results have come during the hardest times. "In a bad economy, you have fires to put out every day, and you think it's the time you can afford to step back and look at the big picture. I think it's the best time to do it."
There Are Some Things You Can Do To Weather the Storm
A. Don't Panic
When things are tough (like during a recession), small business owners and managers react in diverse ways. Some cut parts and some all -- budgets, inventory, personnel, and prices. The important thing to do is “do not panic.” Think about things. Be reasonable with your core team and come up with a plan of action that everyone will follow.
If you are a retailer, do not cut inventory to the bare bones. A big mistake that companies make during this time is stopping all sales, marketing, and promotions by themselves. Examine ways to promote for free or on a shoestring budget. Examine your social media programme or create one. Redefine your core message and network as a team.
B. Serve Your Customers
Pay attention to your customers even more. Listen more. Focus on your services to your customers so that you stand out more than others. For a small business, providing new or better services separates you from your competitors.
C. Communicate Problems and Solutions
A recession takes a toll not only on the bottom line but also on the emotions of you and the company. Business owners can't help but be moved as they see their hard-won gains eroded by forces beyond their control. Keep communicating with your customers, suppliers, lenders, and employees to let them know what is happening.
D. Being Small Is an Advantage
While recessions are rarely good news for any business, they can present opportunities, especially for firms that can take the long view. Because many companies withdraw from markets during downturns, those who see it can capitalize on it. As great people are laid off, others can benefit by teaming up with them. There is an opportunity to attract someone with the skills and abilities into your organization.
Being small means you can be more flexible and adapt quickly as compared to large firms. As long as you focus on the fundamentals and stay positive, your potential for success is greater as the economy revives.
E. Bottom Line
• In a recession, small businesses need to step back and assess their long-term strategies. This often means resisting impulses to slash jobs, inventories, and marketing.
• Focusing on providing high-quality services is an important strategy for small businesses in a recession. Good services can separate a business from its competitors and help it retain customers.
• Small business owners and managers must stay visible and positive in a recession. Keeping communication open with employees, suppliers, lenders, and customers builds the trust and cooperation needed to overcome challenges.
• Recessions can present opportunities for small businesses. Some firms will vacate markets when tough times hit, and these openings can be filled by other companies. Also, small businesses can hire talented people who have lost their jobs at larger firms. (Carey, W.P.)
F. Small Business Organizational Values
What are the values? According to Dictionary.com, value is defined as “relative worth, merit, or importance.” BusinessDictionary.com defines values as “important and enduring beliefs or ideals shared by the members of a culture about what is good or desirable and what is not. Values exert a major influence on the behavior of an individual and serve as broad guidelines in all situations.”
G. Values
Values start to become a part of our lives from the time we are born – these values guide us in our lives, whether good or bad. These values function as motivators for our personal fulfillment and achievement. These values either drive us to grow or not, depending on the values we have. This same principle can be applied to the organizational values of a company.
In other words, what are the collective values where you work, the company you own, or the company you want to start? What is the shared vision for the present and the future? Values can be established at any point in your life and in any organization. Establishing these values at inception is especially important and extremely beneficial because it will refine the focus and motivation for how you will do business both personally and collectively in your organization.
There are three major benefits to establishing organizational values in your organization, small business, and professional life:
1. These values benefit your customers. As these values are practiced long-term, the public sees your consistency, dependability, and trustworthiness. Prospective customers and customers come to know that they can rely on you, your service, and your product.
2. Your brand is empowered over your competition. This shows that you have taken a stand for what you believe in. This shows the public what you stand for – people, policies, ethics, and motivations.
3. Your people benefit. Company values reinforce to staff that there is a MISSION. The mission, with the values at the core, acts as a compass for your team. Transparency equals trust! (Dictionary.com, BusinessDictionary.com, Ethics.org, Askew, Phil, and ATS).
H. Small Business Taxes, Finance, and Accounting
An especially important part of business includes your finances, accounting, records, and yes, taxes. We would recommend that you engage an initiative-taking CPA. Some people think they can go it alone without a CPA, and some can. But when you are ill and need medical attention, do you go to your plumber? No, you go to your doctor. With all the changes and complexities of taxes, it is good to have an overall understanding of taxes, but do find an INITIATIVE-TAKING CPA that will collaborate with you.
We state initiative-taking because you do not want a CPA who enters numbers. You want a CPA who will collaborate with you, suggest things, get involved in your business from the standpoint of accounting and taxes, strategy, and help you.
An especially important part of your business will be keeping track of expenditures, costs, budgets, forecasts, and financial goals for you and/or your company. I would recommend utilizing MS Excel to track your daily, weekly, monthly, and annual payables, receivables, mileage, and notes, as well as utilizing QuickBooks. You can then email your QuickBooks files to your CPA for tax purposes.
I. Small Business and Self-Employed Tax Center - Your Small Business Advantage
When you're running a business, you don't need to be a tax expert, either. But you do need some tax basics. IRS Small Business Advantage gives you the information you need to stay tax compliant so your business can thrive.
J. Importance of U.S. Small Business
How important are small businesses in the U.S.? As history has shown over many decades, small businesses are a key component of national recovery in economic downtimes. But in today’s dismal job market, this traditional employment growth engine is not doing so well. Mostly, it has been larger organizations that are hiring, not small ones. In fact, a lot of small businesses are shedding jobs. This is concerning, given that small businesses account for roughly half of all private-sector jobs in America and more than 60% of new jobs created in the last decade.
Small businesses are having trouble paying bills on time, managing cash flow, and maintaining enough funds to invest in their own businesses according to recent surveys by the Small Business Administration. According to a PNC Bank survey, many small businesses delay hiring if they have concerns about the economy and the burdens they are facing.
As Jeffrey Leonard states, “The trend has to do with cash flow. In troubled times, all companies, big and small, seek to husband their cash by collecting their accounts receivable as fast as possible and honoring their accounts payable as slowly as possible. What is different in this downturn is that, thanks to structural changes in industry supply chains, large firms now have vastly more clout to engage in such behavior than small ones do. In fact, many large companies today have simply announced that as a matter of policy they will be paying their bills late—sometimes as much as four months late. This in effect forces small businesses, which really are hurting, to make free loans to big businesses instead of being able to use their working capital. As the CFO of one small business that we invested in says about his company’s subcontract work with big aerospace companies, ‘They basically have their whole supply chain of businesses like us helping to finance their business.’ His company was told recently that for any new work from its largest customer, they will have to wait ninety days rather than the customary thirty days to be paid. What is interesting about this phenomenon is that America’s large corporations don’t generally need this money—statistics show that they are sitting on nearly $2 trillion of idle capital on their balance sheets.”
K. Missing Businesses and Jobs
Where is the job growth while many large corporations are sitting on an unprecedented amount of wealth in American history? What has affected jobs in the U.S.? A small business is made up of three main things, and there are also a lot of smaller things that come from them.
• The struggle to maintain lines of working capital
• The need to pay creditors in thirty days
• The necessity to meet payroll every two weeks
Multiply each small business by millions and you have a key factor in our lack of jobs, lack of economic recovery, and the state of business affairs in the U.S.
Some of the smaller areas that are affecting job growth are:
• Demand continues to be weak.
• Federal regulation.
• Economic uncertainty continues.
• Lack of credit.
• Price increase within raw resources.
• Global competition.
We can stimulate the economy, job growth, and small businesses, but we must also provide a fair playing field for all companies in the business world. (Leonard, Jeffrey, and ATS).
L. Small Business Summary
In the small business world, the consultant, the entrepreneur, the independent sales professional, and the person desiring to be a modern-day farmer in the business world, supporting themselves is vital! We could write thousands of pages about small business, what it is, how major corporations have started small, the influence small businesses and you have in our society, personal and business values within small businesses and organizations and their impact, small business and corporate challenges, how to succeed in business, and the many other areas that pertain.
Our main objective for this knowledge paper is to draw your attention to how important you are, what a small business means in our society, what some of the challenges are, that solutions do exist, and that you can succeed with focus, faith, and an attitude to think outside the box. If you would like to review our global partnership program, study our model, see the importance of success systems and support, and engage in an exploratory call that could change your financial future and your business, reach out to our website or LinkedIn (Link in bio).
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