Small Business: This should be the last lap of the hard times
The National Federation of Independent Business (NFIB) came out with a Small Business Optimism report as recently as in mid-April. Its chief economist, Bill Dunkelberg, said in an accompanying written statement, “Something isn’t sitting well with small business owners. He attributed it to “poor sales and uncertainty” that “continue to overwhelm any other good news about the economy.”
Everyone agrees with the trend towards recovery, but small business owners are extra cautious and rightly so. The recovery is treading ever so haltingly that even a die-hard optimist must surely be wondering as to when he will experience its impact on his own business. Around 950 business owners were surveyed by NFIB. They acknowledge that job cuts have slowed and a few businesses do plan to hire in the next three months. But sales are still weak, credit is hard to find and, not surprisingly, capital expenditure is abysmally low. The general sentiment is not optimistic for the near future.
Hence, businesses which generate jobs are still leaning towards freelance or part-time help as they would rather cut costs. So, while job cuts are tapering off, fresh hiring is not yet on their minds. Caution is in the air. This wariness has rubbed off on the credit markets too. While large and small community lending entities want to lend more to small businesses, they are wary in identifying qualified borrowers. Thus, business owners are finding it increasingly difficult to meet the even more stringent guidelines for securing loans for their businesses.
True, not many pink slips are being handed out. But there is a huge backlog of those millions of jobs lost. The job market has prompted many to become self-employed. Small business owners need the confidence that extra staff will contribute to their bottom line.
Will Draper, a veterinarian of ten years with an entrepreneurial spirit, opened his first veterinary office in 2001. He soon began to expand, opening several more offices over the short span of just 6 years. In 2007, Draper envisioned a state of-the-art animal hospital with an emergency room involving three times the space. After speaking to many lenders, he opted for Live Oaks for their no-nonsense approach and because he was impressed with their knowledge of vets. He then learnt they were into niche lending to veterinarians only! He got a Small Business Administration-backed loan.
Soon, his business grew 40% and in the process of keeping pace with it, his expenses mounted. He needed to hire more people. He called Live Oaks again. They agreed to help him again before the problem got out of hand. He got the loan with free coaching on how to work the payroll and other expenses. They even guided him on how to avoid his mistakes in future. Said Draper, “They never made me feel bad about approaching them again, but instead made me feel that they really want me to successful.”
The CEO of Live Oaks says this is their competitive advantage in wooing borrowers. Business has doubled for them and they have hired in a period when others were laying off staff! They are a 100% ahead of their projections.
I know such real-life stories are rare and far between in these hard times. Let’s hope to ‘multiplicate’ them, if I may be allowed to coin a new word!