As a Consultant driving growth within small and medium-sized businesses, I am forever in the unique position of getting a first-hand look at what is in the psyche of the nation’s business owners. I can honestly say that things are looking up to many of them, but that optimism remains fragile.
Further, those owners inclined to optimism and abundance are finding creative ways to sharpen-up their organizations and in some instances, experience real growth.
Unscientifically, I began categorized business owner reactions to the N-O-W economy into one of three types:
Thriving in the N-O-W Economy
Type #1: The New Opportunities for Wealth outlook. Shunning the doomsday prognosticators, these entrepreneurs either luckily find themselves already positioned in a rapidly growing sector of the economy, or, by ingenuity, positivity and design are shifting their business from declining markets into related growth markets. A couple of examples:
· A remodeling construction firm whose exclusive business was remodeling repossessed properties for banks. Wow, talk about a growth industry, they are growing well beyond their ability to manage and perform. Help, they need to hire construction supers and skilled workers like mad. Are there any available out there?
· A tire company selling mostly to the general public. Although their sales were sliding downward they opted to keep advertising budgets for radio and television level and provide more discount coupons. The result: to incentivize them from reducing their expenditures, radio and television stations offered twice as many, and in some instances up to three times as many spots for the same dollars. This resulted in the company moving from a somewhat recognizable brand to readily recognizable where everyone could hum their jingle and knew there was a great deal available. Their sales have grown double-digits over these past two troubled years and they have added employees.
Trying to Sit-Out the N-O-W Economy
Type #2: The No Other Way outlook. There are a number of small businesses realizing that some kind of change is required to survive, however, they simply cannot or will not change their old ways of doing business. They want the entitled days of 2006 and 2007 to return and find themselves waiting for the bad dream to end so that they can go back to the “fat and happy” days when so many were prospering. Unfortunately, while they make little or no real change as they wait, they are slowing fading into oblivion.
Consider these examples:
· A large retailer serving contractors in the construction industry had about a decade of 10%+ annual growth. Their sales force prospered as “order-takers” accepting Purchase Orders as rapidly as their building contractor customers could obtain financing. When the money supply was “cut-off” at the end of 2007, so was the constant inflow of new construction projects. Accordingly, while the Owner has endeavored to re-direct the sales team to get out of the office and create new opportunities within some non-traditional growth areas, the team seems to be “nailed to the floor”. Unwilling to actually generate leads and really learn to sell, pining for the happy days of yesteryear.
· A large engineering firm spoke to me about their anxiety over virtually no available work. I asked them how they procured new projects. They answered “we wait for the telephone to ring from an architect and then we accept the project they offer”. I volunteered our services to assist them in learning how to generate more leads and even recommended some strategies and market channels they hadn’t considered. Their response was “everyone knows who we are. We have never had to go out looking for work. Engineering firms don’t get work by marketing or selling themselves, they get it from their reputation”. So, they continue to lay off skilled engineers while they sit on their reputations waiting for the telephone to ring.
Drowning in the N-O-W Economy
Type #3: The Neurotic Over Welmed outlook. The most common trait of these business owners is the haggard look in their faces from the endless treadmill of activity they are pursuing without any real hope. A few months ago, most owners I encountered had this outlook. Happily, as people get more optimistic about the future, the natural positivity of the small business operator is becoming more manifest. Still, even the best of us can’t help but slip into Scarcity thinking from time-to-time: I’m not enough, You’re not enough, There’s not enough. Two examples of this kind of approach:
· An HVAC contractor, despite record homeowners seeking to take advantage of expiring energy credits before year-end, laid off his workforce of 6-skilled and semi-skilled workers, fired his accountant, and dropped his prices 30% (most of his profit and labor)! When we talked he found himself working every day of the week, up to 16 hours per day, trying to keep up with orders and resolute in being unwilling to hire a helper or raise his prices so that he wouldn’t burn out. Would you want to hire a contractor to install you new furnace who was living off of 5-hours of sleep and working every day?
Further, I watched him at a home-improvement show last Fall gathering leads from the public. There were 10 other HVAC contractors in the show. Comparing his leads I couldn’t see that his deep discounting had garnered him any more leads that full-priced, reliable competitors (of those I surveyed). I hope he doesn’t kill himself, I know he is still financially struggling.
· A jewelry retailer complained that sales were off and they were having a lousy trade show. They indicated they had too many competitors in the trade show and competitors in general were selling their products at ridiculously low prices. Further, people were just looking and not really shopping. She indicated that every trade-show, fair, town-days she had attended in the past year had produced the same results. She was critical of her booth space, the management of the trade show, the economy and the busy shoppers who were passing by her booth.
Across the hall, in what appeared to be a worse location, another jeweler was selling jewelry “like hot-cakes”. I thought the jewelry looked like similar product and the price points were directly competitive. In talking with the competitive booth, they were smiling, greeting customers and were a little too busy to talk. They thought the show was going great and were definitely interested in participating in the same show the next year.
Later that night, my wife, an expert in jewelry at any price, told me she liked the jewelry in each booth equally well. Then she purchase a few items from each booth. However, her shopping experience was so much better at the prosperous booth, she hung around, talked to the sales staff, and purchased several additional items.
Philosophically, it all works out
The summary of my observations is obvious. What is your outlook on the economy? Whatever your outlook is, you are right! I realize this seems like an oversimplification of a terrible, nagging problem, but in the end, success in the N-O-W economy starts first with your outlook.
In fact, success in the N-O-W economy starts at the micro level. What is on the minds of every small to medium-sized business owner? They make the hiring, buying and investing decisions that rock the economy, one business at a time. That is why politicians are constantly “spinning” their message on the economy trying to encourage business owners.
They all realize the same thing: when small business believes the recession-depression is over, that’s when we start healing. To be sure: government health-plans, loosening of bank loans-mortgage credit, budget deficits, availability of energy, and many macro issues need to be addressed. But, when the hearts and minds of small business is right, solutions in the macro economy will begin to materialize. Responsible citizens and business owners will demand it.
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