SCORE Minnesota

Small business blues or blue skies?

July 9, 2010

Many economists have what they call a “cautious optimism” about America’s recovery. Like meteorologists, they’ve been forecasting mostly cloudy skies with a slight chance of clearing.

Some local business leaders, however, are sensing profits in the wind. In a June 24 article published in Finance and Commerce titled ‘Twin Cities’ execs see ‘turning point’ (by Bill Clements), two-thirds of Twin Cities area board members and executives expect to see increased profits in 2010 according to a survey by KPMG. The brighter outlook of Twin Cities-area business leaders is an indication that things may be turning around for mid-sized and large companies.

While no one can predict exactly when we’ll all look up and see blue skies, experts are speculating that the great recession is over. Others, especially small business owners are not so sure. As they struggle to cope with rising costs and lagging sales, many small business owners are still singing the blues. Recovery may be slower for small businesses due to several issues. Here are just a few:

• Fewer resources limit the ability of a small business to leverage opportunities
• Global competition makes winning business a lot more challenging
• Attracting and retaining talent can be more difficult for a small business
• Cost and availability of health insurance is an upward battle for small business
• Increased regulatory compliance creates adds more red tape
• New law requiring 1099s on purchases over $600 -adds a lot more administrative work

On the bright side, small businesses have several things going for them including:

• An ability to respond rapidly to market and technology changes
• More free to drop unprofitable products/services and add or innovate new ones
• Increased support from local community and economic development
• Expanding opportunities and support for international trade
• Internet marketing and social media level the playing field for small businesses
• Added support for minority and immigrant business owners
• High unemployment rate means access to highly trained and experienced talent

Another huge opportunity for small businesses is export. If you are looking for new customers, 96% of all customers live outside of the U.S. Two thirds of the world’s purchasing power lives in foreign cities. Even though small business exports represented 30 percent of U.S. exports in 2007, that is only slightly higher that it was 10 years ago according to an International Trade Commission report.

President Obama has a goal of doubling U.S. exports to $3 trillion within five years. Yet, fewer than one percent of the 29 million small businesses export. With lagging consumer spending and a jobless economic recovery, “exporting may be one of the few areas remaining where small businesses can grow right now,” said Todd McCracken, president of the National Small Business Association.

The Twin Cities-area business leaders and executives in the survey believe merger-and-acquisition as well as international expansion as key to post-recession growth. But, many small businesses are reluctant to move forward with international commerce because they don’t know where to begin. They also worry about how they will be paid by foreign customers.

According to Commerce Secretary, Gary Locke, it may be easier for small businesses that are already exporting to a single country to start exporting to others. Six out of ten exporters fall into this category. Locke has formed partnerships with FedEx Corporation and United Parcel Service to offer seminars to small businesses who are already exporting to one country.

This short video contains information on what support is available for small business exporting:

http://www.youtube.com/watch?v=UFQIAszJWn4

You can also find tips on small business strategies in our Strategies for Growth Series. Two articles specifically focus on exporting

If you want to learn more about how to start, operate and grow a successful business contact SCORE by clicking the link on the right to the office nearest you or click here to request free face to face counseling.

Have you ever considered volunteering for SCORE? Our members help millions of new or existing small businesses succeed each year by sharing their knowledge and experience. Click here or the link on the right to the office nearest you to learn more.

Susan Fronk, St. Paul SCORE
View more posts by Susan Fronk

Filed under: SBA,Strategies for Growth Series

Tags: America's recovery, export, international expansion, international trade, SBA, small business, small business exporting