Aug
21
Minneapolis
LIGHTRAINSUN
77.2°
debriefing

Economy

Julie Sands Causey
Western Bank:

612.331.5977
jcausey@western-bank.com
www.western-bank.com

Owners turning
optimistic in tough
year, survey says

by Julie Sands Causey

The maxim goes, “When the going gets tough, the tough get going.” And it is never truer than for small businesses in down times. They focus, they change, they innovate, they hang on.
            
No wonder small business is the lifeblood of our economy and job creation. Even in difficult times, a majority or owners remain upbeat and face adversity squarely.

Recent research data support this idea. Western Bank in St. Paul surveyed small-business customers at the end of the first quarter. A majority of these small businesses believe better economic times are coming. Fifty-two percent said that their businesses would improve over this year. Optimism among small-business owners is welcome news because small business has traditionally led economic recovery locally and nationally.
            
But it hasn’t been easy. The uncertain economy during the past two years has demanded more from small-business owners. They told us they are working longer hours and doing everything they can to make their businesses more competitive.
           
“Our goal is to do what we do better than anyone else in the world,” said one service company owner. “To create an excitement in our company among our people about what we do and to continue to stay on top of finances so they remain strong, healthy and stable.”
         
The owner adds, “These take management, management, management.”

To remain competitive, small businesses are looking at every aspect of their operations. They are focusing on distinctive products and services that set them apart from competitors, marketing programs and updated technologies.
         
Small-business owners are devoting themselves to management concerns. They are staying focused and fine-tuning customer relations and employee skills. They are making changes in the present and planning for the future both at the same time.

Tech firms positive
Leading those that are optimistic about their businesses over the coming year are technology companies (70 percent anticipate improvement) followed by financial services, health care and construction companies.
           
More than 50 percent of small businesses have a plan in place for updating their facilities and equipment. Health care businesses, wholesalers and manufacturers, and technology companies lead those that plan facility changes.
            
The challenge for all businesses is not knowing precisely what’s around the corner. The problem is “economic stability within a tumultuous situation,” said one business owner. “We cannot predict with any certainty what is coming.”
            
Retail, manufacturing and service companies seem to be stuck in that limbo and do not see recovery coming as quickly as many others do. One retailer said that it has been difficult “maintaining and increasing sales in the current environment. We deal with major variables, all running amok the last few years – weather, economy and mood.”
           
And less than a quarter of nonprofits among Western’s customer base believe there will be an improvement for their organizations over the next year. These organizations depend on governmental and philanthropic funding and many have been hit particularly hard. One nonprofit executive summed up the challenge, a “drastic reduction in government funding for social services together with weak charitable support and low interest rates.”
           
Rising health-care costs were mentioned most often as the business climate issue affecting small businesses. Across the board, small businesses rank health care insurance rates at the top of issues that have a large impact on their enterprises.
           
A shortage of skilled workers was a key issue for construction companies and technology firms. “Hiring and retaining high-skilled, motivated people in our office and field positions is the only challenge to growth we are faced with,” a contractor said.
           
One development that bodes well for the future is the focus on improving customer relations. Customer relations was singled out as the most important operations issue among small businesses today. More than 62 percent of small businesses said they have customer relations programs in place.

Overall, our customers told us that better times are on the horizon. And they are more optimistic than they were a year ago.

It is hard not to be impressed by the drive and determination of small-business owners. In difficult economic times, they stay the course and improve for the future. The head of a local construction firm eloquently summarized the energy and focus required: “We live our opportunity daily as independent small-business owners.”

Julie Causey

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