The shutdown is over — but not the pain for small businesses

Another battering could come in less than three weeks.

By Erik Sherman

The government may be open, but come Feb. 15, the doors could close again, given the current state of negotiations. For small businesses, that could be another load of bad news they can’t afford.

The shutdown’s effects went far beyond unpaid government employees and the creeping effects on industries such as air travel. Many small businesses — the biggest source of jobs in the country — were rocked, whether it came to getting financing, filing necessary paperwork, or even trying to get critical information. Some won’t survive another round.

Just ask Michael Paul, co-owner of 11-year-old Cobec Consulting that works with the Federal Aviation Administration, the Navy, and NASA. Even though they put almost all of their 75 employees on furlough, the company had “minimum operating expenses of something close to $100,000 a month,” Paul said, between offices and trying to keep workers in healthcare insurance, if not paychecks.

A credit line kept them alive. But the costs in interest payments will continue. If there were another shutdown, “We’re seriously concerned {…} what that would do to our company,” Paul told NBC News.

During the shutdown, some smaller firms were “on the verge of going out of business,” said Carl Brown, executive director of the Small Business Development Center at Howard University. He mentioned a Washington, D.C. coffee shop right off a subway line frequented by government workers. That business was at the point of considering closing other than at rush hour. They would have still lost money, but not as much. Employees who would have had longer hours would have had to make much less than normal, with no chance of making up the back pay with the government reopening.

Companies have found their prospects affected even if they don’t directly do business with government workers or offices. Investment banking firm Cassel Salpeter & Co. had been trying to broker a sale of a company that sells to defense contractors.

The company said it was “concerned about timing because some of the customers are now delaying purchases,” said Chairman James Cassel. The purchase price of a business is typically expressed as some multiple of revenue or profits. “If the client is starting to see some of their customers are slowing things down, they’ll look less attractive” to buyers, Cassel said.

Adding to burdens, all loans backed by the Small Business Administration were on hold during the partial government shutdown.

Patriot Bank in Connecticut was still taking applications, but companies had to wait for money they needed to operate or even expand and hire additional people. It also hit the lenders. “Whatever loans we couldn’t close, we’ll never make up the interest,” said Kevin Ferryman, director of SBA lending at the bank.

Companies that wanted to file an IPO or expand their public offerings faced uncertainty and potentially expensive delays. Dyadic, a biotech company that sells technology to pharmaceutical firms, was planning on going public and getting listed on Nasdaq. It filed the necessary form in the fall, answered some questions from the Securities and Exchange Commission — and then came the shutdown.

Even though Dyadic refiled and the SEC is back to work, the results are still “in limbo,” Dyadic Chief Executive Officer Mark Emalfarb told NBC News. The practical result has meant less attention from investors for now and missing an important conference where Dyadic could market shares to institutional investors.

The problems all small businesses faced will have a continuing effect for some time. Or, if the White House and Congress can’t negotiate the basics, maybe a longer stretch.

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What will 2019 hold? Here are 6 tips to position your business for success

By James S. Cassel

How can middle-market businesses best prepare for 2019 in economic times so nebulous that even leading economists are at odds? Will we see continued prosperity, a slowdown, a recession? Mixed signals are muddying the waters with on the one hand, low unemployment, relatively low inflation, and modest GDP growth; and on the other, increased stock market volatility, trade wars and tariffs, the closing of manufacturing plants, agricultural bankruptcies, and worrisome hikes in interest rates. Whatever 2019 holds, taking proactive steps now can poise your business for success.

First, research your industry and clients. Knowledge is king. Study successful companies in your space. What are they doing right? How could some of their best practices be incorporated into your own business? Simultaneously, soliciting feedback from your clients and customers regarding how they view their prospects and challenges for 2019 can provide valuable insight, helping you plan accordingly.

Second, hone in on your company’s key priorities and core competencies. Consider dropping less profitable products/services, but carefully weigh this against potential negative consequences. Remember, certain clients could be wooed away by competitors who provide those products/services you no longer carry, and you might lose the business you wish to retain.

While conducting this internal review, make sure everything is being done to nurture existing client/customer relationships, which are the lifeblood of a business. It is easier to retain a client/customer than obtain a new one. Trust, transparency, quality, and good customer service will generate both client loyalty and referrals, helping to keep you afloat even in turbulent economic times.

Third, turn your attention to pursuing new opportunities. As a middle- market business owner, you do well to expand by seeking new clients and markets and possibly additional product/service lines; in a weakening economy, an expanding base can make up for any loss of business from existing customers.

New opportunities can also take the form of acquisitions: if a competitor runs into financial difficulties, consider buying them. Alternately, consider hiring some of their talent or developing a plan to serve their customers should they be unable to do so.

Fourth, is cutting expenses and maximizing value. Start by evaluating R&D to ensure you’re spending wisely; however, avoid cutting back as that’s not in your best long-term interest. Also, work with your suppliers to see how you can get better pricing and thereby reduce your costs. Review your inventory management practices. Reducing your warehousing needs through, for example, drop-shipping, might result in substantial savings.

Outsourcing can also be a valuable means of lowering both your fixed costs and risks. Not all outsourcing firms are created equal, but well-established, reputable companies can be treasured partners. They may assume the risks of changing regulations, technologies, capacities, and market conditions, while giving you access to their efficiency, expertise, flexible capacity, and economies of scale.

Fifth, evaluate your sales and marketing expenses to ensure you’re getting the best bang for your buck. Marketing and advertising your business are essential, but zero in on the channels that most directly, and cost-effectively, reach your target audience. Sit down with your marketing and advertising teams and review their plan for the year. Are they hitting the right media at the right times with the right message? All other factors being equal, which are the most cost-efficient channels for your business? Are they participating in the right trade shows?

Finally, readying your company for economic twists and turns requires preparing a financial safety net. Arrange for your business to have available financing in place now: securing capital in a weakened economy can be close to impossible. Also, liquidity is important, particularly in difficult times, and cash reigns supreme.

Although it is difficult to predict what the economy will do, especially in these times, it is best to prepare for the worst and be pleasantly surprised. A few measures can help future-proof your company and there is no more auspicious time than now, at the start of 2019, to take action. It’s far better to begin preparations earlier than too late. After all, with your middle-market business, as with most things in life, it’s the early bird that catches the worm!

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2018 Tech Year in Review

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How To Make 2019 A Landmark Year For Business Growth

With the new year here, now is the ideal time to focus on creating business growth.

By Julie Bawden Davis

Every January brings with it fresh starts and the possibility of exponential business growth. With some attention to detail—and a focus on new products and services—you can make 2019 a pivotal year for your company.

“The new year offers the opportunity for reflection in terms of where your business has been over the past year and where you’d like to take your company in the coming year,” says Amedeo Lattari, COO and co-founder of Troolr, a platform that connects local professionals with consumers.

The beginning of the year is a great time to implement new and more effective strategies that can catapult your business into unprecedented growth. Here are some steps to ensuring that 2019 is a landmark year for business growth.

1. Review 2018’s business growth.

“It’s very important to enter the new year with your company knowing what worked and what failed the previous year,” says Shelley Grieshop, public relations director at Totally Promotional, an online retailer and manufacturer of customized promotional products.

“You can’t start fresh in 2019 and successfully embark on a new plan if you haven’t evaluated your previous performance,” she says.

Take the time to thoroughly review your business’s performance in 2018. Analyze the state of company’s various avenues for business growth. Take a look at:

  • sales revenue,
  • customer conversion costs,
  • customer retention rates,
  • expenses,
  • inventory and

any major acquisitions over the past 12 months.

Finding a market that is ready and waiting for your product can lead to tremendous business growth in 2019.

—Amedeo Lattari, COO and co-founder, Troolr

All of these metrics will give you a good indication of how your company is doing and where you want to focus efforts for improved business growth.

For instance, if you find that expenses are outpacing revenue, you need to turn that around, or you’ll soon have a problem with profitability.

2. Revise pricing.

A close look at your key metrics may show that you need to raise prices and earn higher margins if you’re going to ensure business growth in 2019.

“Review all of your pricing to see whether your specific markets can withstand an increase,” says James Cassel, chairman of Cassel Salpeter & Co., an investment banking firm in Miami. “It’s equally important to take a close look at cost controls.”

3. Refine your data strategy.

“You may be sitting on a lot of information about your customers and business that can help you transform your organization and take it to the next level in 2019,” says educator and speaker Nir Kaldero, author of Data Science for Executives.

“Treat your data as a strategic asset informing all of your business decisions and you can experience a great deal of business growth,” he says.

According to Kaldero, the beginning of the year is a great time to refine your data strategy.

“Place a strong emphasis on data collection and analysis, security and governance throughout the company,” he says. “Doing this at the beginning of the year will set your organization up for success in 2019 as competition grows and challenges arise.”

4. Consult your accountant or tax planner.

In light of the tax changes made at the beginning of 2018, it’s a good idea to check in with your accountant or tax planner for a thorough review.

Your accountant can examine your financial situation and check that everything is on track. A financial professional can also determine if there are tax changes the company needs to make in order to experience business growth in 2019.

5. Consider your employees.

One of your most important assets that directly affects if you will experience business growth in 2019 is your employees.

“Losing great people results in tremendous cost to a business, so it’s a good idea to focus on retaining your employees,” says Cassel. “With unemployment at such a low rate, competitors or related businesses looking for talent will look to hire the best and brightest away from other companies. Make sure that you are properly compensating your employees and are sensitive to their needs and the benefits that they want.”

6. Focus on offering new products and services.

Make plans to offer your customers something new over the next 12 months, and your business is likely to flourish in 2019.

“The business market is fluid and constantly changing. It’s important to adapt and change with it in order to avoid stagnation and keep things fresh for your customers,” says Lattari.

“Each year at Totally Promotional, we strive to set the company apart from our competition,” adds Grieshop. “We do this by coming up with new products and services and marketing tactics. For instance, over 2018, we created and promoted a new tagline: ‘Our Products. Your Story.’ This enabled us to show the breadth of what our company has to offer.”

While you’re ramping up your marketing efforts, look for untapped markets, suggests Lattari.

“Finding a market that is ready and waiting for your product can lead to tremendous business growth in 2019,” he says.

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