Turning the Shockwave of Gloomy Economic Predictions into a Carrierwave for Expansion

As part of our continued monitoring of how the economic stimulus plan will effect small businesses, we ran across this excellent article in the Miami Herald. Stimulus plan little help for small firms.

As you can see, two economists again point out how little there is in terms of incentives for small businesses during this recessionary time. There's been lots of talking heads on TV spouting forth either the greatness or faults of President Obama's plan to stimulate the economy. It seems that it is a great plan if you are a Democrat and a lousy plan if you are a Republican. We'd prefer to view it from the point of view of the clients and business owners we deal with which are small businesses and private practice health care offices. Choosing a side based upon political party, we feel, is worthless. Deciding based upon the facts to hand is a much better means of evaluation in our opinion.

We certainly hope that the plan ends up helping our clients but, if it does, it seems that it will happen in a more indirect way, rather than by providing direct incentives. According to the article linked above, Raymond Keating, chief economist with the Small Business & Entrepreneurship Council, is also dubious about how much help the plan will give to small companies.

''I think we clearly need a different type of package,'' said Keating, whose Washington-based group also advocates for small business. ``We need incentives in the private sector for people to take risks and expand business. Unfortunately, there's very little of that in this package.''

Mr.Dunkelberg, an economist for the NFIB points out that ''the guy whose job is not at risk has been scared into not spending.'' He feels that when those consumers and businesses start spending, the economy may start to turn around. That would be the indirect benefit to small businesses of the incentives in the stimulus plan.

We prefer to take it one step further, and that is to train and mentor our clients in business management skills so that they are in no way dependent on the stimulus plan working or not. If it works, so much the better but if it doesn't do what is expected, they will still be doing much better than the general economy is doing.

In fact I recently interviewed one of our consultants who works with dozens of clients on a weekly basis. I wanted to know, first hand, how the economy was effecting his clients and how he was helping them through it. I'll share some of that interview with you today. I asked him, "How has the economic crisis affected your clients?" Here is his response:

"The economic crisis has increased the apparent degree of counter-effort that my clients must deal with as they move on with their businesses. The biggest counter-effort that my clients have had to deal with has been the subjective agreement by many people that these are dangerous and dire times. That, of course, is the message that's been promoted strongly by the government and media. What I've emphasized with my clients is to simply not go into agreement with the doom and gloom of that message and that has proven to be successful. There are, obviously, certain phenomena occurring in the economic environment. My clients have for the most part reacted by realizing they needed to sharpen their tools and get better, be more creative and more causative in their planning, management and execution. Those clients are bouncing back from the initial shock wave of the economic downturn, and are continuing to flourish.

Some clients have been hit harder than others. For example, a dentist in a small town was hit particularly hard when the biggest employer in town closed its doors. That of course affected a lot of people in the town and their insurance coverage; there were a lot of cancellations in the client's practice. That was a shock. But my client recovered with some wise re-structuring, better financial planning, and increased promotion.

Another client is in the construction/remodeling industry. That sector has had its downturn, and there were a lot less leads available for his area of expertise. But, with the help of his marketing staff he has recovered very well by promoting to former clients who can use his services, expanding into other niches, and, overall, expanding his promotional activities. Unlike many others in his field, he is very busy and productive.

Most of my clients felt the shock wave of economic changes, but because they had their management and organizational basics in, they have moved right over that 'bump,' and, with a sharper focus perhaps, have continued to expand their businesses and create their own futures."

That's the kind of results we like to achieve with all of our clients and that we'd
encourage all small business owners to attain. Don't go into agreement with the "doom and gloom" naysayers. Yes, there's tough times out there - anyone would be a fool to deny that. But one can either agree with it and become the adverse effect of it, or one can be smart and figure out ways through it to keep expanding. The latter is our approach.

We'd love your thoughts on this continuing discussion. Please visit our discussion forum which can be found at: Silkin Group Facebook Page.

Larry Silver

President, Silkin


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