Small businesses with less than 500 employees constitute a startling 48 percent of American employment and 43.5 percent of GDP, and yet they’re facing an existential crisis of their own in the wake of our most recent recession. As online business grows, many small businesses find themselves unable to keep up, even as new competitors come to take their place. This is particularly true in the current economic climate, when it has become much easier to start a business simply by setting up a web site.
The good news is that entrepreneurs have a number of ways to overcome this problem. Two important factors stand out as being crucial to small businesses in particular. One is financial management, since the failure of a business often brings down not just one employee but the entire business itself. The other is marketing, because without traffic and a strong online presence, small businesses will not survive.
Financial issues are easily solvable for most small businesses by following a few simple guidelines. First, entrepreneurs should always keep an eye on their books, keeping tabs on expenses and revenues. Second, they should invest part of their surplus cash into a savings account, so that running expenses are not disrupted when seasonal revenue slumps. And third, they should seek professional advice when they’re considering major acquisitions or other large-scale business maneuvers.
Internet opportunities abound for entrepreneurs interested in online business, but these opportunities are not limitless. Because of the current crisis, there are a growing number of people wondering whether the Internet, and the associated opportunities, really hold all the promise they make. Many Internet entrepreneurs fear that the online business they’ve built might crumble under the weight of this unique storm. Others seem to think that any problems will be short-lived, and that they’ll rebound later, having learned from the crisis and taken essential steps to protect their small businesses.
There’s no question that the Internet, and the associated technology, have changed the way businesses are done in many ways. The question is whether this change has implications for the U.S. economy. Some experts argue that the latest outbreak of the swine flu, which killed about fifty-six people in the weeks between Halloween and the second week of October, may have been the first sign of a business-killing pandemic. If this is true, it could signal a severe downturn in business spending as small businesses try to make up for lost sales from the pandemic, resulting in higher unemployment rates and slower economic growth.
Experts in business management suggest that small business owners create a business plan for each specific circumstance (i.e., seasonal spending, customer turnover, etc. ), customize it to meet the immediate needs of the business and develop and maintain these plans through the experience of dealing with any number of unique circumstances. As part of this process, entrepreneurs should also develop their own marketing materials – online brochures, business cards, radio and print ads, etc. – which should be specific to the business and its market. This will help businesses become more resilient to changing economic conditions.
In light of the widespread business depression, the government has enacted several measures aimed at supporting small businesses. One such measure is the Small Business Administration (SBA), an agency of the federal government designed to assist small businesses throughout the country. The SBA was established by the Small Business Act of 1953 to protect small business owners from over-regulation and undue hardships. To qualify for SBA loans or other assistance, businesses must demonstrate that they will employ a reasonable number of employees. To this end, many startups are advised to hire a business coach who can guide them through the application process.
In the aftermath of the recent recession, the entrepreneurial spirit is seemingly stronger than ever. However, there are still challenges to overcome for new small business owners. As they begin their journey in business, smart, small business owners must be aware of the pitfalls and challenges, along with the necessary steps to overcome them. A well-designed business plan can be the key to success for these entrepreneurs, but it is important to begin the journey with sound business planning principles.