Friedrich Nietzsche said, “That which does not kill us makes us stronger.”
So it seems to be for many entrepreneurs during this recession, according to the results of the American Express OPEN Small Business Monitor.
- More than three quarters of entrepreneurs believe managing through the recession has made them better business owners.
- Four in ten business owners have an optimistic outlook on near-term business prospects, on par with one year ago when the macroeconomic climate was significantly different.
- Nearly four in ten entrepreneurs feel the current economic environment creates opportunities for their business.
While optimism has stabilized, business owners are still managing their firms with caution — bootstrapping more than ever.
Consistent with the NFIB survey I wrote about a couple of days ago, this survey found that capital investment plans remain very low, hiring plans are down significantly, and many entrepreneurs are adjusting their own retirement plans. Forty-two percent of business owners plan to make investments as a way to grow their business over the next six months, down from 53% last spring. Just over one-quarter of entrepreneurs have plans to hire this spring (28%), which is among the lowest Monitor readings in its history.
Small business owners are not taking this recession lying down. Many are finding new resources to tap and new ways to manage costs beyond the traditional steps of laying off staff or cutting back on staff hours. Nearly half of business owners (45%) are open to bartering for new products or services with customers or suppliers and nearly one-quarter (23%) report their barter activities have increased due to the economic environment.
Additional steps include:
- 48% have instituted hiring freezes
- 30% are no longer taking a salary
- 27% have a family member working pro bono
- 25% are renegotiating leases and supply contracts
- 16% have cut benefits
- 18% work a second job
Not all entrepreneurs view the current economic environment as a hardship; a distinct group (37%) says that the current economic environment actually creates opportunities for their business. Among these opportunistic business owners:
- two-thirds have a positive outlook on the economy
- half plan to make capital investments
- just over one-third plan to hire.
Nearly all of these glass-half-full entrepreneurs (92%) say that managing through the recession has made them a better business owner, compared to 77% overall.
While I do believe we’re bottoming and the worst is over, most of my clients and others that I talk to think that recovery will be very slow. I’m recommending that my clients prepare for a “new normal”, with revenues around where they’re settling out to for the foreseeable future, and aligning costs to those revenues. Things will improve, but I suspect it will be a while before we see a return to anything approaching previous revenue levels for many small businesses. I wish I could be more optimistic.
It makes sense to me that in tough economic times, entrepreneurs rise above their circumstances to find innovative ways to survive. I think that there has to be a time of failure to inspire new growth. We are a part of a free market system and slow economic times are a natural part of that cycle. While it can be devastating for people who lose jobs, it can stimulate creativity and a new sense of work ethic that may have been lost in the last few years.
Being Vietnamese and seeing how many Vietnamese businesses have reacted to the recession has allowed me to notice a larger dissonance on Vietnamese business owners and true entreprenuers. I would say my father was a true entrepreneur, he purchased a struggling restaurant when the Vietnamese restaurant industry was largerly undeveloped. He took many risks in his life, while current Vietnamese business owners tend to copy blindly what they deem as successful. During this recession, they have spent excess of $40,000 renovating and many nail supply stores have opened. I wish they would consider more about the consequences and benefits of their actions rather than doing what they think will work. Optimism is great. I hope that ethnic business owners connect the smaller pieces, learn from this recession, and discover unique opportunities.
Thank you for the interesting subject and article! What about bartering? http://www.barterquest.com, they claim, you can barter goods, services and real estate for free. What I like about the site is they have instant matches, which could save great deal of my time.