LinkedIn Users Respond To Chief Economist Query
Recently, Chad Moutray, Chief Economist & Director of Economic Research at the U.S. Small Business Administration, Office of Advocacy, was the featured person on LinkedIn, a business-oriented social networking site. He posed the question, “What measures should small businesses take to weather this economic downturn?” and received well over one thousand responses. People from all over the world responded with their ideas, opinions, and personal experience in order to help answer this question. This question was posted in conjunction with the “Weathering the Economy” forum cosponsored by SAP and myventurepad.com.
Quite a few responses had repeated themes within them. A common idea was that small businesses should focus on growth opportunities during this downturn. Often, during an economic crisis, firms that were once competitors may be forced to shut down. This can lead to a small company becoming a large company if enough competition withdraws. That would be the ideal time to go and secure their customers. In the same manner, it is extremely important that a company continue to pay attention to their client-base. If the client feels appreciated during the recession, then they are more likely to be loyal to the company and stay with it once the market rises. As a business owner searches for these growth opportunities, they should also focus on making a long-term plan for the company. That way, once the downturn is over, the company will be ready to start moving forward.
Another theme that was popular is the idea that small business owners should never stop advertising or marketing their firms. Many business owners feel that advertising is an unnecessary expense, but during an economic downturn it is more important than ever. It is one of the easiest ways to keep ahead or on par with the competition. By advertising, not only is the business name out in the public, but it is also helping to expand the customer base. Another good idea received from the LinkedIn responses is to keep the small business as liquid as possible. This means to use as much cash as possible and as little credit. By doing this, it is much harder to go into debt and easier to keep track of the business’s cash flow. Also, by using cash to buy assets now, a lot of money will be saved in the end. Assets are much less expensive now, during a recession, than they are in a more stable market. Therefore, buildings and other equipment will be less expensive to buy now.
Finally, most responses included a statement explaining how laying off employees is not the route to take during this economic crisis. It is better for company morale, and more economical to simply place a hiring freeze and train current employees in multiple positions in case they are needed to take care of more than their regular duties. Many responders explained that keeping employees informed about the companies actions and views on the recession are the best way to keep them loyal. That is because they will feel more secure about their job and be more trusting of their employer. Also, if new employees are really needed, now can be the time to hire, as many very talented employees have been laid off from other companies and are looking for a job.
In the end, the multitude of responses to Moutray’s question shows that there are numerous ways for small business owners to cope with the recent economic turmoil. Yet, every company and every employer is different, and some ideas may work better in certain situations.
— Rachel Grant, fall intern