The recent economic recession has proven to be a double-edged sword for many businesses large and small. Small businesses with fewer than 500 workers comprise nearly 48 percent of American employment and 42.5 percent of GDP, and yet, they’re facing an existential threat from the financial meltdown. The spectre of not being able to keep up with inflation is forcing entrepreneurs to take a close look at the economics of their business model.
Although small business owners may feel somewhat immune to economic concerns, there’s no such immunity when it comes to assessing the health of one’s business operations. Therein lies the current crisis, which is threatening to wreak havoc among small businesses large and small. As the economy continues to recover, the specter of more job losses, higher consumer debts and rising living expenses loom large over the small business community. Unless action is taken, many experts believe, this upcoming economic downturn will lead to more bankruptcies and a stagnant economy that won’t to lift America out of its recessionary slump.
“If you think about it, the coming of the Internet and smartphones could be upon us by the end of the next decade, if not sooner,” said Greg Pahl, CFO ofPE Ventures, a venture capital firm in San Francisco. “There will be an ‘appetite for change’ as more people realize they can use these things to create an income stream that will allow them to buy products and services they would not otherwise be able to afford.” This sentiment is also echoed by analysts who project that the number of smartphone users will continue to rise. This increase in demand for online content and services could spur a rush of small businesses rushing to embrace new technologies, resulting in a reduction in business assets.
In an effort to remain relevant in an increasingly mobile society, small businesses are scrambling to find ways to stay ahead of an ever-increasing number of consumers. Experts say that most of the major markets will be untouched by the outbreak of the flu, but they do agree that the business to business market will feel the impact. Consumers in places such as San Francisco, LA and Chicago, where health concerns have historically been higher, will be especially hard hit. “When you’re talking pandemic preparedness, you’re talking about being ready in the face of any outbreaks that may occur,” said Mike Wright, CFO of GoodEyes, a technology company that provides mobile business apps. “You’ve got to be prepared for anything from a simple cold to a major epidemic.”
“The challenge that entrepreneurs face is in being flexible enough to work with any kind of economic climate,” said Jay Levinson, CEO of Digital Source, a technology company that provides cloud computing and SaaS to small businesses. “In a world where the Internet and smartphones are becoming an indispensable part of everyday life, it’s important for entrepreneurs to understand how everything is tied together and how it can affect their business.” Levinson went on to explain that many of the same challenges will also be faced by businesses in Europe, which is the region that most experts agree is lagging behind the rest of the developed world when it comes to the handling of its economy. “The big issue here is that there’s a limit to what technology can do for a country and a particular market sector,” he said, citing sluggish economic growth and mass layoffs as prime examples.
“There are plenty of examples out there of technology helping to solve business problems, but it’s important for entrepreneurs to remember that it can only go so far if you don’t have the right system in place,” said Jessica Enderlein, VP of products and programs at ITXchange, a technology firm that provides cloud services to small business firms. “If you want your firm to be highly mobile and streamlined, then you need to have a comprehensive mobile platform.” This is something that should be seriously considered by new business owners, especially when faced with a tough economy. “The mobile industry has the ability to change the face of almost every business in the world,” said Enderlein. “But it requires attention to detail, massive investments in research and development, and a comprehensive plan.”
Ebersco Consulting’s David P. Freed agrees that investing in entrepreneurship journal articles is one of the wisest moves an entrepreneur can make. “Journal articles give a vignette of what’s possible in the marketplace today,” he said. “That will help you make a more informed decision about what to do.” The open access nature of the articles is another great benefit: They give you the chance to explore many different business possibilities and gain knowledge about where you can invest your money.
The knowledge gleaned from reading these small business finance articles can be crucial when it comes to making important business decisions. Whether you’re an entrepreneur starting a new venture or simply a small business owner looking for ways to trim expenses, this knowledge is invaluable. “The current crisis we’re facing will play a huge role in what kind of business opportunities we have in the future,” said Covid-19’s Enderl. “But the key is knowing what to look for in small businesses and what you can do to avoid pitfalls.”