The Crisis is Us – Is It a Crisis For Small Business?
In an economic downturn, most entrepreneurs feel the need to do something concrete to stimulate business growth. For instance, small business owners have asked themselves: “What can I do to stimulate my business growth?” This is the question economists have been asking for decades. Many economists believe government intervention can make a difference in economic activity. The question is: how much does government intervention actually help business?
The study was published by the National Bureau of Economic Research. The researchers surveyed about 5,000 privately held firms nationwide. They discovered that these firms to be cash strapped, with most having already laid off employees or temporarily shut down. Surprisingly, they also found that these small businesses are unsure about whether they will receive federal assistance to cushion them from a recession. They provide five suggestions for small businesses navigating a more difficult future:
* Determine what type of help you require. Only 5 percent of small businesses are eligible for some or all of the federal grants aimed at providing “support for small business.” The research study found that entrepreneurs were particularly misinformed about which programs were available to them and even less likely to use them if they were eligible. That’s bad economics.
* Open up your wallet. Entrepreneurs are not necessarily more entrepreneurial if they have more money. However, as we have seen with the economic stimulus plan, entrepreneurs tend to use their newfound wealth to take risks that eventually pay off. Ebsco’s Personal Enterprise Exchange program encourages entrepreneurs to develop risk taking behaviors through its financial incentives and communication initiatives and to build on those behaviors by using their wealth to support their ventures.
* Maximize your personal savings. Ebsco’s Personal Enterprise Exchange encourages businesses to save early, make wise investments, and to be open with financing decisions. That kind of discipline extends to how businesses manage their finances in general. Those who own and operate small businesses have a much greater opportunity to use existing business finance resources such as checking accounts, personal savings accounts, business credit cards, merchant cash advances, accounts receivable financing, joint ventures, franchises, and other forms of capital for growth, expansion, and other projects.
* Seek guidance. Entrepreneurs can get support from both the Small Business Administration and the Small Business Development Center when planning a business startup or expansion. Both share similar views about the current crisis and about how to move forward. As a result, many entrepreneurs are already taking advantage of both programs when they start up their new businesses.
* Prepare for a business “pandem.” There’s no need to wait for a major catastrophe to persuade small businesses to partner with larger corporations. In fact, many corporate giants are now providing lines of credit and offering matching payments to small business owners that expand into different markets. For example, GMAC is teaming up with GE Financial to provide business finance solutions to businesses in North America during this pandemic.
This was only one of the frequently asked questions about this latest global financial crisis. Of course there are many more. However, the answers to these questions hopefully give small business owners the direction and confidence they need to secure the future of their companies.
Small entrepreneurs who are considering starting a home business should first research the options they have available to them. They may wish to consider starting out as part of a coworking or entrepreneurial group. This is an excellent way to get your feet wet in the business world and make contacts who can help you later on. Many and entrepreneurial groups focus on a particular industry, such as Internet marketing, small business finance, home business opportunities, etc. By being exposed to other members’ stories, entrepreneurs will be better prepared to weather the storm during the initial few years of business ownership.
The best way to start is probably to seek out local mentors who are already successful at home businesses. They may be willing to speak with you and/or offer you their advice on how to go about setting up a business at home and growing it. You could also talk to home business magazines and ask them about the success of local small businesses.
In today’s business world, everyone needs a plan. Starting a small business is no different. A local mentor who can give you advice and guidance is also an invaluable resource. The current crisis we find ourselves in is proof that the business world is evolving and growing by leaps and bounds. By staying ahead of the curve, small businesses will continue to prosper and contribute to our society.