Advice for small companies: Take stock, take risks
The economy is showing signs of life, and that makes it a good time for small-business owners to reevaluate how they run their companies.
Now that crisis mode has passed, experts say, entrepreneurs need to make sure they're ready to take advantage of growth opportunities.
Nearly half of small-business owners say they believe there will be such opportunities in the coming year, according to a survey taken in June and July by the National Small Business Association. That's up from 38 percent six months ago. The Wells Fargo/Gallup index of small-business confidence, compiled from a July survey, jumped 9 points, to 25, from the start of the year.
Of course, the economy still has soft spots. Many business owners are uneasy because they still don't know what health insurance will cost under the Affordable Care Act. But they shouldn't give in to uncertainty, said small-business adviser Paul Sarvadi.
"I wouldn't let the negative news and negative backdrop rob you of that innate risk-taking advantage and edge that you have," said Sarvadi, CEO of Insperity, a Houston human-resources provider.
Here is a look at what small-business owners should be doing right now:
Look ahead. "Back away from the business and look strategically at next year and ask, 'What can I do differently?' " Sarvadi said. "Look at your [business] plan. Are you going to beat it or be behind it?"
Think about how you get sales. "You have to aggressively make sure you have your best foot forward on every sale, especially those most likely to come in," he said.
Keeping costs down should remain a priority because customers are willing to bolt to another business that offers lower prices, said David Rosenbaum, president of Real-Time Computer Services, a technology-services company based in New York.
"You need to be putting an additional emphasis on figuring out how to less expensively deliver what product or service you're delivering," Rosenbaum added. "You may not be able to charge what you did before."
Business owners also need to help customers understand that their products and services are more valuable than those the competition offers.
"They have to figure out ways to communicate that they're different," Rosenbaum said.
Contemplate change. Take an honest, hard look at your company and see whether there are fundamental adjustments to make, said Kathleen Allen, a professor of entrepreneurship at the University of Southern California's Marshall School of Business.
"You need to really analyze your business and say, 'What are the products or services I'm selling that are doing well? What are the ones that are not? And can I substitute them with something else?"
Throw caution to the wind (sort of). "To do nothing is to take a risk, and more often than not, it's as great a risk as taking calculated action," said Dennis Ceru, an adjunct professor of entrepreneurship at Babson College in Wellesley, Mass.
Consumer spending and the economy can rebound quickly. Companies that can't jump on that because they don't have the necessary staff or equipment may lose out to the competition.
"To be caught unaware and unprepared is as bad or worse as stepping into the pool before it's up to temperature," Ceru said.
Not moving forward because of uncertainty about the health-care law is a mistake, USC's Allen said.
"They will not get all their questions answered for some time to come," she said. "Do you stand and wait for everything to be figured out before you do anything to grow your business?"