Change is here

Whether or not you agree with, or voted for, Obama, it is comforting to know that there is one fewer uncertainty in our uncertain times – we now know who the next president will be. Change is now inevitable, as the new administration will shed new light on everything from the economy to foreign policy to health care. The long and weary season of campaigning is finally over!

As a colleague and I talked over lunch yesterday we were lamenting the depth to which the stock market has recently sunk and the wide day-to-day swings. We came to the conclusion that after the election the markets should at least stabilize as the uncertainty of the election outcome will no longer be a factor. I hope we are right and that energy can now be focused on doing the right things to bolster the economy. That can only be good for small businesses.

The Economy

I had lunch yesterday with a group of about 20 other business owners at the Federal Reserve Bank in Cleveland. Through COSE, the Federal Reserve had gathered us to talk to us briefly about where they see the economy, but more important, they wanted to get a snapshot of the economy through the eyes of small business owners. I commend them for the initiative. I was honored to be included.

The Fed’s presentation was  a series of graphs, with commentaries on the graphs, the gist of which was that an economic recovery is anticipated half-way through next year. Honestly, I really do not think the experts have any better crystal balls than the rest of us do!

Some of the owners present indicated that their businesses had not yet seen a negative turn due to the current crisis. Many, however, did relate real concern for their businesses. Concerns about getting new credit, and even keeping existing credit lines with banks, was mentioned a number of times. One person pointed out that the fine print in credit line agreements allows the bank to change the terms or even terminate the line at any time.

A commercial builder was distraught because his lumber supplier, a third generation company, has just closed due to lack of credit and falling lumber prices. The builder is also concerned that tight credit will also either delay or cancel future projects.

A large candy maker is solving her credit concerns by requiring a 50% deposit with all orders.

On the positive side, a software developer who helps larger companies with document management systems, said her company is doing very well, although payments are getting slower. I do believe that businesses, like hers, which improve productivity should be quite recession-proof.

I give the Feds credit for listening to small business owners. I hope they, and other government agencies, do much more listening in the future.

Will Limkemann
Limkemann Business Advisors
440-871-0976
www.neobizadvisor.com

A Time for Obama

September was the best month in my client’s three year history. They went into October with a large backlog and October has been promising to be a good month. The client sells designer products into specialty retail stores. In my meeting yesterday I learned that, due to the economy, orders are being cancelled, in spite of the fact that stores are beginning to stock up for holiday sales.

The client is a home based business which needs to move into commercial space. We reviewed a three year lease contract for a selected property, and I suggested some changes that should be made to the lease. The realtor is pressuring the client into signing the lease, but I recommended that we delay any action for at least a month to determine what direction the economy might turn.

While still optimistic about the direction of her business, the client said that the direction of the economy will be much more positive if Obama wins the election, and if that happens she would move forward with the lease. I have to agree with her. I think America is in a deep funk, and that electing Obama is going to inject a new sense of energy and optimism in all of us.

Will Limkemann
Limkemann Business Advisors
440-871-0976
www.neobizadvisor.com

Stress

The current economic uncertainties combined with a very prolonged presidential campaign is proving stressful for almost all Americans – perhaps for many people throughout the world. I think that business owners are feeling the stress even more than most folks.

Yesterday a client expressed concern over her business line of credit with a major bank. She has had the line for some time. It is almost maxed out, but she is making regular and timely payments to the bank. She asked me if I thought the bank might call the loan. I gave her as much assurance as I could, but had to tell her that banks today are doing “strange things”. To add to her concerns, she produces a line of high end luxury merchandise. The question in her mind is whether the market for non-essentials will just dry up until the economy recovers. I tentatively suggested that there are still plenty of folks with disposable income – that it would be an ever increasing challenge to find and market to those people.

The good news for many business owners is that their fortunes are not tied to the stock market, but to the investments that they have made in their own companies. So, if they keep doing the right things, they may fare better than people who have invested heavily in stocks.

We are in for some interesting times.

Will Limkemann
Limkemann Business Advisors
440-871-0976
will@limkemann.net

The Constant Entrepreneur: Advice for Running a Productive Business

Key Small Business Issues

A colleague, who is also a small business advisor, posed the following:

“Although we are all facing hard-times in this economy, I wanted to ask what you think are two or three key hurting points that small businesses are experiencing the most and how we can specifically target these issues striking a nerve with the owners. It seems that if they are really suffering more than usual, the need for help should be even greater.”

Here is my response:

What I tell small businesses owners when they ask if they should be worried by the economy – my answer is “no”. (If they are running Ford they should be worried!). They should look at the economy as a way of sharpening their business skills, evaluate the market, and make sure they are selling products that people want at a price they can afford. They may need to change their business model to do so, but small businesses are resilient if managed properly. So long as we have a country of 300 or so million people, there will be demands for every type of product or service imaginable. It is up to a business owner to smartly meet the demands his/her businss can fill.

 

What are the issues are most on the mind of small business owners? Oil and Fuel Related costs are at the top of the list. As business advisors we can help business owners by assisting them in improving efficiency and helping to pass the costs on to their customers. The approaches will vary depending upon the industry. For example, in landscaping we can: help to make routes more efficient, train drivers in fuel conservation, train customers to accept fuel surcharges, etc.

 

If the company is a plastics manufacturer, help may be needed in: negotiating volume purchase of raw materials, material waste management, pricing to reflect increases in material and fuel costs.  (Many small business owners do not know their profit margins or their fixed or variable costs – we can help there).

 

In summary, smart business owners are going to weather the current economic storm and even grow and prosper. It may mean that they need to look at things differently and change strategy, habits, and tactics.

 

 

Will Limkemann

Limkemann Business Advisors

440-871-0976

www.neobizadvisor.com