How Bad Times Are Good Times For Small Business

    May 28, 2009
    WebProNews Staff

Bankruptcies are the highest they’ve been since 2001, a million people have lost their jobs, and small businesses got the stimulus package shaft. And that’s the good news.

It’s all good news, says Mark Deo, executive director of The Small Business Advisory Network and author of The Rules of Attraction: Fourteen Practical Rules to Help Get the Right Clients, Talent and Resources to Come to You!

Mark Deo
Mark Deo

Deo caught up with WebProNews during promotional rounds for his new book and explained how now is the time for small businesses to evolve or die. What seem like troubled times for small businesses may actually carry some golden opportunities, buried way down under a heap of yick.

Deo says that although small businesses generate over $6 trillion of annual revenue, constituting over half of the nation’s gross domestic product, just under two percent of the $789 billion stimulus package—about $16 billion—is specifically earmarked for small business. (Deo includes businesses with $50 million valuations as small businesses.)

The Troubled Assets Relief Program (TARP) hasn’t been of much use to small businesses either. “TARP was supposed to be used to move money into the hands of small business owners,” said Deo. “But banks have held on to that money and not made it available.”

Until this week, anyway, as the US Small Business Administration announces the availability of 30,000 interest-free loans of up to $35,000 from TARP banks. While that might be a start, a little lube for seized-up credit market, it costs more than that just to send your kid to college.

Deo’s overriding point is that small businesses are not going to be able to rely on the government to pull them through the current financial crisis. “There are 30 million small businesses in the country, but the population is very fragmented.” This leaves small businesses, as a group, somewhat disorganized.

“They really don’t have lobbyists to push their initiatives through, and our economy is suffering because small businesses don’t have the resources they need. All the money is in the hands of these very large companies who are very wasteful, self-centered and bureaucratic.”

Deo stopped short of calling those big companies—energy, oil, telecoms included—evil. “They’re just not spending money wisely.” And yet these big companies are the biggest beneficiaries of government aid.

“There is some good news,” he says. “There are some small businesses that have not been operating effectively in this economy, and a number are folding. There were more bankruptcies in the last quarter than in every previous quarter since 2001.”

That’s good news?

Deo says it is. It’s a survival of the fittest thing. “Weaker businesses are pushed to the side, leaving strong small businesses and market leaders to snap up extra market share.” 

The other good news also doesn’t sound like good news: Big companies are laying people off. “About a million people are on the street now,” he said. “Some of them are real smart and some are going to become entrepreneurs.”

Perhaps they’ll start a business specializing in helping small businesses locate stimulus money?

Well that, or, as Deo settles into a short narrative preview (the full story is available in his book—see, opportunity everywhere after all, eh?), they can do like a downsized teacher client of his, who now runs a multimillion-dollar financial consulting firm for teachers only. Focusing locally and specializing can help a small business owner become “a bigger fish in a smaller pond.”

“And that’s what my book is about,” he added.

Or instead of starting their own businesses, the rest of that newly available talent will be looking for work. “Small businesses can scarf up some of those really smart players. A lot of Fortune 500 employees are going to work for small businesses next. I’ve had several clients who’ve been fortunate enough to acquire some A-player talent.”

One might call that the Making Lemonade Out of Lemons philosophy.