Wednesday, June 9, 2010
I participated in a small business round table discussion last month at the Metro Atlanta Chamber of Commerce with Dennis Hightower, Deputy Secretary of the Department of Commerce. He was traveling throughout the United States meeting with business leaders to gather ideas on additional steps the government can take to spur job growth. He clearly had another more important mission - to remind us, using a well rehearsed list of statistics about the amount of stimulus money the Obama administration has sent to Georgia. One message he heard in response to this, was all the money appeared to be going exclusively to large corporations. Little, if any, was trickling to small businesses.
One point Hightower made that I will wholeheartedly agree with is that jobs will return only when consumers and businesses start buying again. I added to his thought saying this will occur only when businesses induce customers to buy with relevant products or services they need and want, at a price they are willing to pay. This means businesses must adapt to the new fiscally conservative customer, not the other way around.
Hightower agreed and sighted as a success story a fiberglass molding company in California that used to produce interiors for luxury boats. At one point, the company employed more than 300 highly skilled craftsmen. But with the recession, the business suffered a drastic decline in sales and was barely holding on with just 30 employees. Hightower said they helped this company identify a new emerging market for its skill-sets – producing green energy turbine windmill blades - and now the company is growing again.
This is a great story, but I reminded the Deputy Secretary of the amount of resources (dollars/expertise) it took the owner to develop and implement the new business strategy and to retool the company for this new market. He admitted it was significant. I also reminded him that most small and medium sized businesses just do not have these kinds of resources – either the cash or the expertise.
I have seen first-hand how introspective business owners recognize the need and genuinely want sound strategic growth advice yet are so cash strapped they can’t and won’t pay for such services. So, on the one hand you have the administration wisely encouraging small business owners to change their product or service to meet the demands of the new cost-conscious shopper, while on the other hand many of these same owners don’t have the tools or resources to make such a strategic move.
This recession will be historic by its unique statistics. The net worth of the average American has dropped in dramatic fashion. At the same time, the debt level of most people has skyrocketed, as they are using personal credit to stay a float. The combination of these ingredients will slow the recovery as the first priority will be to pay off debt and recover wealth.
For business owners to be successful in selling to this customer, he must devise a strategy that will result in a product or service that is timed right and has overwhelming value and appeal. It is these businesses that will succeed and generate the jobs President Obama is looking for.
The Small Business Growth Council (SBGC) of the Metro-Atlanta Chamber of Commerce followed up Hightower’s visit with a letter addressed to him. In it we made several recommendations including the following for spurring job growth: Make federal stimulus money available to small-and mid-size enterprises to engage outside service professionals for the purpose of devising a new 3-year strategic plan and one-year actionable tactical plan to prepare them for the new fiscally restrained customer and/or guide them to an emerging growth market.
Though not an advocate of unfunded government spending, if Washington intends to spend the money anyway, the SBGC felt its recommendations will put those expenditures to better use and result in long-term, sustainable job growth.
Only through sound strategic planning and with an actionable script can a company transform itself with the right efficiency improvements to price its products or services in a manner that compels customers to start buying again or reveals and facilitates the move to new emerging markets (similar to the example about the new windmill blade producer) where customers and businesses are spending money.