By Mark S. Lee and David Girodat
Small businesses are a massive source of employment. The Small Business Administration (SBA) reports that smaller companies employ 47.5 percent of the private U.S. workforce. According to 2012 U.S. Census figures, there are nearly 62,000 small businesses in Detroit and about 152,000 across Michigan.
Entrepreneurship helps build the middle class by giving lower-income populations a chance to prosper more quickly and exponentially than they might as someone else’s employee. Small business ownership also gives women, minorities and other underrepresented groups the opportunity to create the job they want.
Fortunately, Detroit and surrounding communities have efforts underway to support the underrepresented entrepreneurs, including the Detroit Development Fund’s Entrepreneurs of Color Fund and even Walsh College’s Entrepreneur You forum for women.
While Detroit’s entrepreneurial ecosystem continues to emerge and become more robust, there are still challenges and potential headwinds on the horizon which need to be navigated. According to various reports, the economy is poised to slow down later this year or in 2020.
There’s an expectation the U.S. economy to grow more slowly than last year, but is expected to deliver above-trend growth, manufacturing jobs are back and growing domestically, the Federal Reserve’s full employment mandate has not been met.
Using a baseball analogy, the U.S. economy is in the 8th inning of its expansion, with the ninth inning not far behind.
So, what does this mean for businesses?
It means you need to be prepared to adjust to potential challenges.
Surviving more challenging times takes skills, perseverance and passion for long-term goals. Implementing the following practices can help ensure your business’ survival and even allow it to thrive during a potential economic downturn.
What can businesses prepare for to potentially navigate shifting headwinds?
Focus on improving your cash flow: Cash flow is the lifeblood of your business and to keep your business healthy, enhance cash needs to continue flowing through.
Eliminate unnecessary costs: There are costs your business can cut to stay afloat. Evaluate costs and focus on identifying efficiencies, where appropriate.
Inventory management control: Reduce inventory costs without sacrificing the quality of goods or inconveniencing customers. Evaluate the supply management process to vendors use to gain maximum efficiencies.
Diversify product lines: Economic downturns can be a good time to take the risk that makes one an entrepreneur. This may be a time to expand your business portfolio and invest in areas that present an opportunity and look for ways to broaden the appeal of your products.
Offer valuable customer service: The last thing you want during tough times is the loss of customers. Your clients are your lifeblood during an economic downturn—you should fight to keep them.
Stay engaged: There are programs and resources available to support small businesses. On May 7, there is a Small Business Workshop which will focus on providing ideas on how to “Navigate the Headwinds of Change.”
The good news is that while ups and downs in the economy are a given, businesses – small and large alike – can equip themselves with the knowledge, strategies and resources needed to navigate any headwinds.
The views expressed by the authors are not necessarily those of Fifth Third Bank and are solely the opinions of the authors. This article is for informational purposes only. It does not constitute the rendering of legal, accounting, or other professional services by Fifth Third Bank or any of their subsidiaries or affiliates, and are provided without any warranty whatsoever.
David Girodat, Regional President, Eastern Michigan, Fifth Third Bank
Mark S. Lee, President & CEO, The LEE Group. You can hear him on “Small Talk with Mark S. Lee, Sundays, 8-9am, via radio.com and “In the Conference Room”, 11 a.m., Sundays, on 910am