Why Real Economic Recovery Might Change Small Business Forever

The Economy is a broad topic with many educated (and some not so educated) individuals offering theories, opinions, and best guesses about how and when the US economy will return to something that resembles the current definition of "good" - whatever that may be.  But if you listen to the mainstream messaging, you might feel that these mostly smart people have widely varying views on "how" to correct it.  For me, I often feel that the "how" is irrelevant.  What matters to me is the definition of "good" as it relates to our economy.

The next Presidential campaign will surely focus on our economy.  No matter who is elected, the challenge of improving the economy will require radically new thinking.  Like raising taxes and maybe even intentional inflation.  I have no opinions about who the next President will or should be, but I do have thoughts on how I anticipate the economy will be approached.  If the cost of goods and services in general increases, many small businesses will have to close.  If we lose more small businesses, then we increase the number of people who are out of work and / or stop spending money.  This, in turn, will increase unemployment and Medicaid claims, keep retail prices high because overall sales volumes will be down, and this cycle will continue endlessly, making any real economic recovery a distant reality.

As a small business owner myself, I am concerned about the waning buying power of the dollar.  I worry about gas prices and the cost of a gallon of milk.  Although lately, I have been especially frustrated about the never-ending construction on Bruce B. Downs Blvd and wondering when (not if) I'll have to boil my water again for another three days....  but that's another matter.

Here is my concern for small business: the economy is NEVER going to return to any resemblance or version of its previous self.  Really.

The housing bubble collapse of 2007/2008 is in our past now, but its effects are still felt around the world.  It seems no country has been insulated from this terrible series of events, and we all may continue to be affected for many years to come.  Funny how the current state of our economy can be tied to 3 simple words - 1. mortgage 2. backed  3. securities.

Fast forward to the present, and we have an unsteady and inaccurately reported economic situation.  Unemployment is said to be at about 9% nationally, but these records exclude anyone not collecting unemployment, or who gave up on finding work. 

For the millions that fall into this scenario, they have fewer dollars to spend on goods and services.  Why pay $45 for a dry-fit golf shirt at a national department store when you can get a comparable item for $17 online?  I recently purchased a new battery for my Dell Latitude laptop.  My options were to pay about $117 to have special ordered from my local IT services provider, or about $25 at Amazon.  Is there really a choice here?

While these examples represent benefit for the consumer, they depict an ominous future for small business.  Let's see - pay $70 for one dozen golf balls at the pro shop, or spend $35 online?  You get the idea.  How might the golf course owner survive if most of the items sold in the pro shop are available online for 50% or less? 

Another important point to make here is that small business has been fighting similar trends for years.  Box stores like Wal-Mart and Best Buy are able to offer low prices with liberal return policies because of their supply chain driven cost benefits.  Consider a television.  The local electronics store has your 50 inch flat screen in-stock, but the nearest box store is blowing them out for nearly half price.  Who wins?

Small business represents more to our economy than one of many places to make a purchase.  Small business accounts for 40% of the US workforce, yet as the largest single economical segment, it is the most vulnerable to market shifts, customer loyalty, and fluctuations in the buying power of the dollar.  These hard working men, women, and families not only generate tax revenue and create jobs, but their kids go to school with yours.  You see them at church and local events.  By supporting small business, we support our communities, the economy, and the future.  If you are worried about "how" our economic challenges will be solved, then I have only suggestion:

SUPPORT SMALL BUSINESS EVERY DAY

It is estimated that small business will account for more than 50% if the US economy in the next ten years, and this trend is expected to continue.  If we don't make small business a focus of ours now, even if we are all not small business owners, then who knows what our future holds?