Tag Archive for 'Great Recession'

The facts on small business and banks

Listening to pundits and politicians, you’d think banks were intentionally hurting small businesses and the economy. When a Senator or “Talking Head” says, “This economy needs banks to start lending to small businesses again,” you might think they know what they’re talking about. They don’t.

The NFIB Small Business Optimism Index is the gold standard of small business surveys. If you track the monthly results of Dr. Bill Dunkelberg’s work on his Index, as I have on my radio program for more than a decade, you will see that throughout the entire period since the Great Recession began in 2008, more than 90% of small business owners have consistently reported that their “credit needs are being met.”

It’s true that the big banks curtailed lending while getting their own balance sheets under control. But out here on Main Street USA, if your small business qualifies for credit and wants it, you can get it from either an independent community bank or credit union, if not from one of the national banks. The problem is not credit availability; it’s demand. Like everybody else on Planet Earth, small businesses are deleveraging.

We wanted to know a bit more about the banking relationships of small business owners, so recently, on our website and weekly e-newsletter, we asked this question: “What type of bank do you do business with?” Here’s what we learned:

Our respondents who do business with a “large regional or national bank,” were barely more than those who said they trade with a “local community bank,” coming in at 38% and 36%, respectively. The third option of our poll, “a local credit union” – which are increasingly proving their relevance to small businesses – was chosen by 15% of our sample. And finally, a little more than one-in-ten said they needed a bank.

A week later, in a companion poll, we asked our small business audience: “Are you happy with your current banking relationship?” Seven out of ten said yes and 17% said no. And the group who said they “would change banks if they could,” came in at 13%.

The results of our unscientific online polls are backed up by the findings of several highly regarded surveys, like Dunkelberg’s NFIB Index: Main Street small businesses are dealing with many challenges in this not-so-great recovery, but access to credit is not one of them.

Uncertainty is suppressing small business loan demand, not banks.

I talked more about banking relationships recently on The Small Business Advocate Show. Click here to listen or download my conversation on how happy small businesses are with their banks.

For more great SBA content, click HERE!

Small business economics

Two years after the technical end of the Great Recession, the U.S. economy is still struggling to recover. It’s clear that the residual of the causes of this downturn have yet to be absorbed. In fact, GDP growth for 2011 is tracking at a slower pace than last year.

As we’ve done periodically in the past year, we recently asked our audiences about their experience in the economy right now. We asked, “Based on your small business right now, which of the following most closely fits the economic conditions you’re experiencing?”

The first choice, “Up - our business is good,” was chosen by barely more than one in ten of our respondents. This is pretty close to the top response in the last poll we took.

The middle question, “Flat - we’re doing okay, but growth is slow,” was the big group, coming in at 65% of our sample. The last options, “Down - we’re barely holding on,” was admitted by almost one-fourth of our respondents.

With almost 90% percent of our poll participants reporting either slow or no growth, this, unfortunately seems to track pretty close with other polls I report about on my radio program, The Small Business Advocate Show, as well as the national economic indicators.

It’s clear to me that the U.S. economy is not going to grow until small businesses are able to grow.  What part of this is lost on the so-called leaders in Washington who are doing more than anyone to dampen the enthusiasm of America’s marketplace heroes, small business owners?

How do you feel about what our political leaders are doing to stimulate the economy?

I talked more about the economy and small business on my radio program, The Small Business Advocate. Take a few minutes to listen…

What is your big concern for 2011?

Since the last third of 2008, as our world began spinning into what we now call the Great Recession, when talking with small business owners I’ve asked them what is their single greatest concern. Almost every time the answer has been, “More sales.”

Here we are, almost two years into the not-so-great recovery, and we wanted to know what small business owners’ big concern is today. So we asked my radio and online audience this question: Which one of these four areas will be the single most important thing you will work to improve in your business for 2011: grow sales, improve profits, get a bank loan, or find qualified people.  Here’s what we were told:

Once again, sales came in on top at more than 40%. No surprise here because, as one of my mentors once told me, “In business, sales cures all ills.” Clearly, with unemployment at almost double-digit levels, a big chunk of small businesses are experiencing weak demand that is slowing delivery of the marketplace medicine of sales.

In second place, one-in-four of our respondents selected profit improvement. This group probably represents small businesses that have achieved sales recovery at a level they can service with the resources they have, and now want to find a way to keep more black numbers on the bottom line.

Perhaps the big story in our survey is the response that came in third – 17% said their big concern was finding qualified employees. The good news is they anticipate hiring. The bad news is concern about the applicant pool not producing qualified prospects for increasingly precious positions.

As ugly as the current 9.6% unemployment statistic sounds, the human fact is uglier: We may have 17 million people either unemployed or underemployed. Structural unemployment – unqualified for 2nd decade of the 21st century jobs – is our most challenging economic headwinds, and the longer this problem persists, the longer it will take for a small business’ first concern – sales – to be solved.

At fourth place was credit availability, with about 14% selecting this option. This response helps dispel two media myths that have been around since 2008: 1) As our survey – and every other one I’ve reported on for the past two years – will attest, most small businesses are not interested in a bank loan; and 2) If a small business wants – and qualifies for – a bank loan, they can get it. Independent community banks have never stopped making small business loans.

Have you decided what your big assignment is for 2011?

This morning on The Small Business Advocate Show, I talked more about this survey and the results. Click on the link below and take a few minutes to listen, then leave your comments on what’s most important to you in 2011.

What are your biggest small business concerns for 2011?

What happens in Vegas … is happening around the country

We’re in Las Vegas for a conference (honest) starting on Monday. When we were here two years ago, in June 2008, there were many construction cranes still operating at full tilt. When we arrived in June last year those same cranes were still standing, but idle; their projects having succumbed to some of the worst effects of the Great Recession. This year the cranes are gone and, with the exception of a few derelict properties those cranes used to stand over, the Vegas skyline looks pretty clean.

The cab driver said the housing industry is still in the tank, which is too bad for those whose home value got upside-down with their mortgage requirements, resulting in thousands of foreclosures here. But as with any ecosystem or economy, the misfortune of one is opportunity for another. In Vegas today, as in many markets around the U.S., the foundations of future fortunes are being laid by entrepreneurs who are buying foreclosed properties to rent and hold as unemployment wanes and home-buying waxes.

As we continue to move - day by day - from recovery to expansion, there are similar opportunities appearing in virtually every industry. But in order to take advantage of them you have to: 1) be looking, which means you’re not still hunkered down in your bunker; 2) recognize the opportunity; and 3) develop a strategy to take advantage of the opportunity in a way that allows it to become a growth event and not a catastrophe.

Today, everything that is happening in Vegas doesn’t have to stay in Vegas. Open your eyes and look around; the foundation for your next fortune may be right in front of you.

Economic recovery job one: Rebuild trust

In life and in the marketplace, nothing works without trust. I believe that so much that for the entire time I’ve been talking with small business owners on my radio program, we’ve included the wisdom and counsel of experts on trust as regular programming. Here is an important thought on trust from one of our experts, whose name and book I’ll identify below:

“Trust impacts us 24/7, 365 days a year. It undergirds and affects the quality of every relationship, every communication, every work project, every business venture, every effort in which we are engaged. It changes the quality and outcome of every future moment of our lives, both personally and professionally.”

The Great Recession we’re experiencing has produced a kind of double jeopardy: the classic negative elements of any economic downturn, plus what we now know caused the recession, a collapse of trust. Consequently, true economic recovery can’t happen, regardless of government efforts, until we regain trust. Not only do we have to rebuild our economy, we have an extra, and even more important assignment to fulfill: each of us has to demand trust and demonstrate trustworthiness across all sectors of society and the marketplace.

Recently on my program, The Small Business Advocate Show, the author of the quote above, Stephen M.R. Covey joined me again to discuss why operating with trust and fostering its growth will be more critical to success in the future than ever before. Stephen is a member of my Brain Trust, co-founder and CEO of CoveyLink Worldwide, a keynote speaker and advisor on trust, leadership, ethics, and high performance, and author of The SPEED of Trust.  The quote is on pages 1and 2.  And yes, he is one of Mr. and Mrs. Stephen R. Covey’s four sons.

Take a few minutes to listen my visit with Stephen and leave your thoughts on rebuilding trust. Listen Live! Download, Too!

One inspirational small business survival story

When big businesses get into a bind, the sheer size and calamities of any one of them is such a huge story that politicians feel they must get involved. But remember, there are only a few thousand of those companies.

For America’s small businesses, The Great Recession created a lot of financial pain, organizational damage and way too many failures. But when the recent economic conditions cause problems for any one of these 26 million heroes, the story likely won’t even make the local paper. And as we’ve seen, any help for small businesses from our so-called political “leaders” has been lip service at best and bad policy at worst.

Please allow me to report on one of America’s small business Great Recession stories. Think you’ve had it bad? Had to overcome a lot, did you? Got tough times? Listen to Gigi Stetler, as she talked with me recently on my radio program, The Small Business Advocate Show, first about being a woman business owner in a male-dominated industry, and then she reveals the greatest challenge she had to deal with.

Gigi is the author of Unstoppable: Surviving Is Just the Beginning… and the only female owner of two RV dealerships in the U.S. Take a few minutes to listen to Gigi’s story and, as always, leave your thoughts and your story. Listen Live! Download, Too!

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