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Mar
19
Economy Slows - How Does it Impact Sellers?
March 19, 2007 | Anita Campbell
The current U.S. economic expansion has been going strong for several years. But indications suggest that the economic growth is slowing down.
Small business owners apparently feel much the same way — that things are slowing down (not stopping or declining, just not growing as fast).
This is reflected in the NFIB’s Small Business Economic Trends report for March 2007. Part of that report contains the Small Business Optimism Index, which declined 0.7 points over the past month, to 98.2 (1986=100). The following chart of the Optimism Index shows it has been declining for over a year now (there are slight ups and downs from month to month – the longer trend is what’s important):
So, if small business owners are feeling less optimistic and quietly scaling back, what does all this mean for those who sell to the small business market? Several things — here are a few:
- Keep your product and service offerings month-to-month or 90-day commitments at most. Business owners are going to be less inclined to take on long term commitments and fixed expenses. Small business owners like shorter time commitments in general — they insist on them when business gets slow.
- Show business owners how your product or service will help them do more without hiring more people. One of the key declines in the March 2007 Optimism Index was a slowing of hiring plans — that one factor accounted for 50% of the decline. Hiring staff brings a significant fixed expense that business owners tend to avoid like the plague. If you can show them how to do more without adding staff, you earn waves of warmth. Notice this is different from saying your product or service can help them cut staff — many small businesses don’t have enough cushion in their staffs to be able to cut. Talk about reducing staff tends to be tuned out as “big corporation speak.” But helping them avoid the fixed expense of a new hire is a different message.
- Offer discounts or incentives for business owners to pre-pay for products and services. In the event of a possible decline in the economy later this year owners are going to be less inclined to spend money then. I’m not saying a decline is definitely going to happen — but let’s face it, economic expansions go in cycles and this one cannot continue forever. And I know this may sound contradictory to my first point, but not really. Discounts have something in it for the customer, whereas long-term commitments generally are viewed as helping only the seller.
Final point: don’t get discouraged by all the talk about a slowing economy. Remember, good businesses still do good business even during slower times.
