21 Jan, 2012
Small Business Trends to Look for in 2012
Just when small business owners thought the worst of the economic fallout had passed, an article appeared recently outlining six trends that can threaten unprepared business owners. The trends, compiled by Guardian Life Small Business Research Institute, warns that “ongoing uncertainty of the economy, increased competition and the impression of negativity surrounding election-campaign rhetoric will greatly affect small businesses in 2012.”
Here’s a rundown for the continuing developments in 2012 with a suggestion of how to deal with them:
Marginally successful businesses will reach a breaking point
According to the institute, one in seven business owners estimated that they would have to close their doors if revenues were to decline significantly in the next 12 to 24 months. One suggestion to avoid this is to improve productivity and evaluate your resources to make sure that everything (and everyone) is there to move the business forward.
The economy’s instability continues inhibiting growth
Of the owner’s surveyed, 44% cited the economy as the “one thing standing between (them) and growing (their) company.” The article recommends planning for the short term with a flexible but “dynamic” plan, and using it as part of an overall long-term plan of action to keep you on your goals.
Access to capital and lending practices continue tighten
Bank of America’s recent cutting off of credit lines to small-business owners may be something picked up by other banks as lending continues to be strict. In the survey, many of the respondents prioritized their money so that any money borrowed would go to upgrading equipment (91.2%), maintaining cash flow (81.3%), investing in marketing (78%) or adding workers (60.7%).
Competition heats up as larger companies try to pick up the customers they used to overlook
Whereas once they didn’t have the time or need to pick up smaller revenue producing customers, larger companies may now be giving these prospects a second glance. The article suggests using your small business advantages to stand out, such as emphasizing locality, personalized customer service, or lower prices.
The elections will create a negative tone and tense environment
You may be non-political, but with the ads and debates where the country’s economic problems are exaggerated to create an atmosphere of fear, people may be grow more cautious or pessimistic. People may buy less, employees may be disheartened, and even the business owner can feel skittish. However, lead by example and try to stay positive. Remember, politicians make their living off of creating fear, not you!
There will be more exchanges and “deal making”
To keep the smaller amount of customers they have, vendors and service providers will be more open to cut into their profits in an effort to keep their customers, i.e. long-term contracts. The article suggests cutting deals “that create certainty for your vendors, customers and your own business.”
These trends don’t have to spell the end of a small business; John Krubski, research adviser to the institute, explains, “Anticipation of these issues, coupled with guidance on how to tackle them, will help small businesses maintain and potentially grow their businesses in the new year.”
Adds Patricia Greene, adviser to the institute, “Small-business owners have to be highly motivated and learn to be creative and resilient to succeed in difficult economic times.”
If anything over the past few years has taught us anything in business, it’s that a business owner can’t always anticipate the changes in the economy. But a small business owner can do his/her best to prepare against any concerns that drastic changes may bring by maintaining efficient productivity and constant marketing.
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