The Crisis May Help Some Small Businesses
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By Gene Marks
Yes, it's definitely bad out there. And it will probably get worse. But most small business owners like me can also find some hopeful signs coming out of the financial nightmare gripping this country. I'm talking about people who have been running businesses for a while, who employ people, and have customers. Startups are a whole other thing (and good luck to them at the present!). It's those established business owners who will see some benefits of this mess in future months. Here are a few reasons why.
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Next: Better Relationships With BankersMore From BusinessWeek:
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Better Relationships With Bankers
Know how over the past few years banks have been ignoring us, chasing the big money? Remember when we used to get tickets to the ball game or taken out for a round of golf? It's going to come back. Suddenly, those boring little local banks that lent money to small businesses with actual assets are looking pretty smart right now. Surviving institutions, their egos bruised and their credibility in ruins, are going to want to be just like them.
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Forget About Stocks for Awhile
We've all been burned a bit by the stock market. We've learned a lesson. Maybe investing our excess funds in better equipment or our people is a better long-term investment than that mutual fund holding securities in a company I've never heard of. Now that the stock market has lost its shine, business owners will start doing what we should have been doing all along. Reinvesting our money into our own companies is good for... us.
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Rediscover Your Balance Sheets
Get ready to face some scrutiny. The last thing these bankers want is to get burned again. But this is not a bad thing; it's a good thing. Quarterly financial statements and debt covenants are not a punishment. They're great metrics to help evaluate the profitability and value of a company. Shouldn't we have been paying close attention to all of this in the first place? It's time that we all get more disciplined. More prudent. More focused. Our bankers are now going to require this. And for good reason.
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Raise Your Prices
Why? It won't be just to keep up with inflation (which is probably going to happen from all the money flooding the system by the Fed). It'll be because all of those idiot competitors of ours, without financing and facing a slow economy, are going to start choking on the fumes of their sputtering businesses. Suddenly, not showing up to jobs and doing shoddy work is going to mean something. We've always known we do better work. And that our prices are worth it.
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Have More Respect for Regulation
Small business owners, like myself, are loath to give the government credit for anything. We hate red tape and all the things that bureaucracy can to do to a capitalist society. We don't like big government spending or large tax increases. It's just part of our DNA. The Fed, the Treasury, and the Securities & Exchange Commission aren't perfect, but they've kept the system going at a time when, historically, it would have imploded spectacularly. They have proven to me that there needs to be a role for regulation in a capitalist society.
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Grab Some Space, Too
One day the newspapers are crying because real estate is so high no one can afford it. The next day they're crying because prices have dropped. Well, we're not crying. The bursting real estate bubble means that we can finally, finally, finally buy that building or rent that space at a reasonable price. Not that overly inflated fairy tale of a price we were offered just a year ago. Now's the time to look for bargains. And the bankers will loan us the money... after they've protected us both by doing the appropriate amount of due diligence.
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