By: George Rose, Wells Fargo V.P., Business Relationship Manager
If I had to pick one week that deserves more recognition it’s National Small Business Week. Every May, the U.S. Small Business Administration takes this time to celebrate the contributions of small businesses to America’s economy.
It’s well deserved. Small businesses employ half of all private-sector employees and have created 65 percent of net new jobs over the past 17 years*. As a lender that loans more money to small businesses than any other bank in America**, we’re proud to work with so many small businesses that are driving economic recovery.
When we talk to small business owners today, we hear increasing confidence. At the same time, many say, “things will never quite be the same” as they were before the Great Recession. Consumers remain wary. Companies are more cautious about spending. Businesses are still repairing their balance sheets. Demand for credit has not fully recovered. Many are calling our post-2008 world “the new normal.”
As a result, small business owners have changed their approach over the last two to three years. While individual strategies vary, here are some common themes I’ve observed among small businesses that have adapted and succeeded. For starters, they have new attitudes about customers, cash, and creativity.
Customers. Small business owners often tell us about the importance of providing even greater “value” to customers. Many have a sharpened focus on delivering value in every interaction – both in what they sell, and the service they provide before and after the sale. Online marketing tools like email and social media have created new opportunities to connect, but also new responsibilities to “earn” your way in every customer relationship. And when looking at ways to make it easier for customers to work with you, take a look at the payment options you offer. Talk with your banker about your options, such as accepting debit and credit cards, and what makes sense for your business.
Cash. A careful attitude toward cash is another hallmark of the new normal. To take a more strategic approach to expenses and revenue, ask your banker about financial products and services to streamline and better track each outgoing payment, and help bring in receivables faster, as well. The greatest challenge for many small business owners in today’s economy is cash management – managing the gap between when invoices are paid and bills are due. You may want to consider a business line of credit to help smooth the ups and downs of your cash flow without affecting other financial priorities.
Creativity. Beyond minding your customers and your financials, the new normal may require a more fundamental change. These days small business owners are taking a deep look at how their businesses operate, and thinking about creative ways to keep their enterprises thriving. Following are strategies some of our small business customers have pursued:
- New markets – close to home and beyond. Can you sell more of your current offerings by reaching out to new customers in new markets? Some businesses we serve are now finding new opportunities through emerging social media and Web aps, and by rewarding loyal customers who introduce their businesses to new customers.
Merger. Joining forces may mean sharing decision-making power, but it can also extend your capabilities and your reach.
Licensing and franchising. If your brand and model can be duplicated, you may have the opportunity to build on your success while going light on resources and risk.
Are you prepared for growth?
For some, the recovery is revealing opportunities to expand. It’s important to make sure your business is ready. Ask yourself what kind of preparation, such as financing, operational upgrades, and new skills you may need.
For a broader perspective, it’s a good idea to consult with other professionals who have been in your shoes. Seek out people with relevant industry and business experience. And remember to stay in contact with a team of trusted advisors – every business owner needs at least an attorney, accountant and banker or financial advisor on their team. Consider sitting down with your advisors early in the process – not just to size up the financial resources you may need, but also to help develop your strategic plan.
As we celebrate small businesses in May, it’s a great time to start this conversation. Use this time to reach out to trusted advisors to review your plans and, we hope, gain guidance and inspiration for your future success.
- U.S. Small Business Administration Office of Advocacy, U.S. Department of Labor, Bureau of Labor Statistics
- 2010 Community Reinvestment Act (CRA) data
George Rose is a Wells Fargo Vice President, Business Banking Relationship Manager. He has served in small business banking in Houston TX for over 10 years George can be reached via email: email@example.com.