NEW YORK, NY (Press Release – December 5, 2011) – The Guardian Life Small Business Research Institute has identified six trends small business owners are likely to face in 2012. Many of these trends are extrapolated from the Institute’s research fielded in October 2011, which surveyed nearly 1,100 business owners of various sizes. They indicate that small business owners will need to focus on improving productivity and differentiating their businesses to overcome continued economic challenges and to compete with larger companies in the coming year.
“The ongoing uncertainty of the economy, increased competition and the impression of negativity surrounding election-campaign rhetoric will greatly affect small businesses in 2012,” said John Krubski, research advisor to The Institute. “Anticipation of these issues, coupled with guidance on how to tackle them, will help small business owners maintain and potentially grow their business in the New Year.”
In addition to identifying critical issues for small business owners in 2012, The Institute outlined six specific actions owners can take to prepare for likely challenges in the coming year:
1. Continued economic volatility in 2012. The Institute’s research found that a significant portion of small business owners, 44 percent, believe that the economy is the “one thing that stands between where you are today and growing your company.”
· Action: Develop and deploy integrated action plans. A dynamic and flexible short-term plan makes it possible for a business to deal with immediate challenges. However, a short-term plan is most likely to succeed if it is part of a comprehensive, proactive long-term planning process.
2. Access to capital will continue to be tight, and lending practices even tighter. 2012 is likely to see a drop in business spending and continuing sluggish GDP growth. Neither of these factors bodes well for loosening the supply of capital flowing to small businesses.
· Action: Consider where borrowed money can do the most for your business. In considering the cost of debt, business owners responding in the Institute’s research offered the following priorities relative to borrowing money to fund their operations: upgrading equipment (91.2 percent); short-term cash flow (81.3 percent); investing in marketing (78 percent); and adding people (60.7 percent).
3. Significant numbers of marginally successful businesses will be pushed to the brink. According to Institute data, 14 percent (or one in seven) of small business owners surveyed said they would probably close down their companies were revenues to drop drastically over the next 12 to 24 months. For sole proprietors, that figure increased to 23.3 percent.
· Action: Improve productivity. A difficult economy presents an opportunity to right-size a company for long-term success. Small business owners should ensure they have the right people in the right positions so they can focus on growing the business – especially at a time when competitors’ market share may be vulnerable.
4. Larger companies will aggressively market to prospects considered “too small” in the past. Larger companies with which small businesses compete will be more likely to “poach” customers they have traditionally considered to be outside of their target market segment.
· Action: Look for ways to meaningfully differentiate. Small business owners should seek ways to demonstrate how their company is more responsive to customers or able to provide more customized, localized or cost-efficient service. They can also consider partnering with complementary businesses to offer a broader range of resources to customers that traditionally prefer dealing with larger companies.
5. Election-year campaign rhetoric will create an atmosphere of tension and negativity. Small business owners should expect that presidential candidates and members of the media will devote a great deal of time and attention to how “bad” things are, or how “bad things might be.” This negativity can further dishearten the customers, salespeople and workforce of small businesses – not to mention small business owners themselves.
· Action: Be optimistic! If small business owners exude a sense of confidence, optimism and focus, their customers and employees will feel it and respond accordingly. More than in most years, attitude in 2012 will be extremely important to success. Further, when it comes to future legislation, small business owners should not get distracted, but rather stay on their path.
6. Trade-offs and deal-making will characterize 2012. Vendors and service providers will be more willing than ever to trade a degree of their profitability for the certainty of doing business.
· Action: Cut deals that create certainty for vendors, customers and the business. Small business owners should sit down with vendors and larger customers and offer to make commitments in return for price reductions or better payment terms. This includes meeting with staff, advisors (accountant, attorney, financial planner) and key customers to do a “start from scratch” review of everything that costs – and makes – the company money.
“With many large companies downsizing, small business owners have a unique opportunity to be creative in the way they attract talent from organizations by offering competitive benefit structures,” said Ernie Guerriero, head of qualified plan marketing for the Business Resource Center for Advanced Markets at Guardian.
“Small business owners have to be highly motivated and learn to be creative and resilient to succeed in difficult economic times,” said Patricia G. Greene, Ph.D., MBA, special academic advisor to The Institute and the Paul T. Babson Chair in Entrepreneurial Studies at Babson College. “The trends and actions identified by The Institute can serve as a great toolkit to help them be even more enterprising in 2012.”
About The Guardian Life Small Business Research Institute
The Guardian Life Small Business Research Institute is a resource devoted to better understanding America’s small business owners. It combines research the company commissions with the expertise of people within the Guardian Life family who have deep experience in the small business community, to yield deeper knowledge, insights and wisdom about today’s small business trends. In 2011, The Institute was named one of North America’s top small business influencers in the Small Business Influencer Awards for making a meaningful and lasting impact on the small business market.
For more information about The Guardian Life Small Business Research Institute, please visit: www.smallbizdom.com.
A mutual insurer founded in 1860, The Guardian Life Insurance Company of America and its subsidiaries are committed to protecting individuals, business owners and their employees with life, long term care insurance, disability income, dental insurance products, and offer 401(k), annuities and other financial products. Guardian operates one of the largest dental networks in the United States, and protects more than six million employees and their families at 115,000 companies. The company has approximately 5,000 employees in the United States and a network of over 3,000 financial representatives in more than 80 agencies nationwide.