Catalyst House

Small Business Pulse – 2nd Quarter 2010

Our latest findings are in, and while not earth shattering, that many small business owners have learned to work smarter and do more with less.


Latest polls show –

– Nearly seven out of ten (68%) disagreed that healthcare reform efforts would benefit their businesses

– Nine out of ten small business owners agreed that current stimuli do not benefit small businesses

– 62% will invest more in marketing; specifically, lead generation

– More than 60% said they will run their business more aggressively in 2010

Pollsters for the above data included Forbes, Businessweek, and MerchantCircle.

By definition Small business owners are risk takers and typically welcome challenges. The past 24 months have made business owners better business managers and more effective decision makers. However, the most telling feedback from the studies highlight the immense challenges ahead – Only one-fifth of respondents (21%) believe that the financial crisis has already bottomed out, with 47% expecting this to occur in mid-late 2010. They predict the financial markets will turn around in 2010/2011, stability will return in 2011/2012, and growth won’t come back until 2012 or later.

“Our recent survey reflects continued uncertainty among merchants. Economic outlook has decreased to roughly the same level as November 2009, with most business owners continuing to think the worst is yet to come,” says MerchantCircle’s Darren Waddell.

Credit Crunch Continues

Small businesses, the backbone of our country, are key to the economic recovery. Half of the people in America own or work for a small business. Small businesses have created 64% of new jobs over the last 15 years, but they have cut 65% million of the 8 million jobs slashed in total since the credit crisis began.

Outstanding loans to small businesses declined to $660 billion in the first quarter of 2010, from almost $700 billion two years ago. Lack of credit for small businesses stymies job creation and saps the potential of a real economic recovery.

Karen Mills, Administrator of the Small Business Administration: “The recovery is under way, with small business in a better place now than a year ago, and the SBA’s loan guarantees are back up to pre-crisis levels — but that there’s still work to do.” Mills also said the U.S. needs to ensure that small business has continued access to credit to sustain business activity and, in turn, job creation.

Ben S. Bernanke, the Federal Reserve chairman, concurs quoted recently that banks needed to increase lending to small businesses to reduce unemployment and help the economic recovery.

“Our recent survey reflects continued uncertainty among merchants. Economic outlook has decreased to roughly the same level as November 2009, with most business owners continuing to think the worst is yet to come,” says Darren Waddell, vice president of marketing for MerchantCircle.

So what to do? We emphasize the small business ‘triple-play’ strategy as a proactive approach to thriving in a collapsed economy.

The SBIU ‘Triple Play’ Strategy

It’s not just YOUR business in the economic doldrums – its most every small business. Knowledge is power and knowing key steps to immediately take can give your small business an immediate advantage over other similarly situated competitors. For most small businesses it boils down to a basic ‘triple-play’ involving solid bookkeeping, well-managed barter, and localized small business search marketing.


See Catalyst House SBIU May-June 2009 ‘Obama Small Biz Bailout’

Editor’s Note: At press time additional late breaking polls were released by Washington Post, CBS News, and the US National Federation of Independent Business showing a marked further loss of confidence in Obama’a handling of the economy. in general, and for small businesses in particular.

Small businesses aren’t very positive on the economy these days, and the NFIB report emphasizes that.

“The U.S. economy faces hurricane force headwinds and the government is at the center of the storm, making an economic recovery very difficult.”

“The Index has been below 93 every month since January 2008 (30 months), and below 90 for 23 of those months, all readings typical of a weak or recession-mired economy. Seventy percent of the decline this month resulted from deterioration in the outlook for business conditions and expected real sales gains. Owners have no confidence that economic policies will fix the economy.”…

“Hiring and capital spending depend on expectations for growth in future sales, so the outlook for improved spending and hiring is not good,” said Dunkelberg.
Small business owners continued to liquidate inventories and weak sales trends gave little reason to order new stock. A net-negative 21 percent of all owners reported gains in inventories (more firms cut stocks than added to them, seasonally adjusted), one point worse than May. Plans to add to inventories declined five points to net-negative 3 percent of all firms (seasonally adjusted).

Kent Bernhard reports: Now the US Chamber of Commerce has issued  an open letter to Obama accusing the government of “dropping the ball,” when it comes to economic policy over the past year and a half, and calling for a change of course.

The White House, Naturally, Objects

According to Bernhard, the Chamber’s letter brought a swift counter from Obama aides. Chief of Staff Rahm Emanuel and senior adviser Valerie Jarrett fired their own letter back at the Chamber.

“The stakes are far too high to be working against one another. That is why we were surprised and disappointed by some of the rhetoric we have heard from some in the business community,” they wrote, in what amounted to a point-by-point rebuttal of the Chamber’s missive.

2010-2012 Outlook? Its going to be a bumpy ride.

Catalyst House