Check out A Tale of Two Depressions. It draws a parallel between the depression of 1930s and the current economic situation. The editor highlights that the article received “30,000 views in less than 48 hours and over 100,000 within the week.” I am tempted to say that we seem to want to believe that we are in a depression.
My experience with small businesses tells me a different story. In the past few months I interacted with various small businesses, I wondered why I don’t see the gloomy picture in them that I see in economist’s blogs and News channels. I will give you three examples of small businesses I know personally. I will restrain from naming them.
First, a person with whom I have a competing business, based in Ohio. I happened to talk to his clients. They have the same complaint against him. He doesn’t have time. He has too much business! Can he complain about the economy?
Second, a Financial/Management Consultant, who has loyal client base. He actually managed to expand his business and went from having 5 to 10 employees in the same gloomy economy.
Third, a technology startup located near Phoenix, Arizona, which despite a possible “depression,” has managed to raise money to fund its long-term research program.
When I look back at those examples, I find some common traits between them:
- They choose a business that they are good at and consequently have satisfied clients.
- They have a good revenue source - either through cutting edge marketing or through loyal customers.
- Their costs tend to be variable allowing them to turn the costs on or off based on their pipeline.
- They also seem to experiment and find new ways to reduce costs and stay competitive. One of small business owners I mentioned above told me “Market is imperfect. You can find good employees at significantly lower salary bill. But you have to search for them extensively.”
I do empathize with many businesses that suffered during the current economic crisis. However, I believe that small businesses, especially services-based businesses, have a really good chance of doing well even in this economy.
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About the author: Chaitanya Sagar is the Founder and CEO of p2w2 (for PeopleToWorkWith), which helps small businesses outsource services like business and financial planning, software, virtual assistance, and research. p2w2 also helps build relationships with vendors so you can focus on your business. Chaitanya blogs at p2w2 blog.