Savvy small businesses can cure today's weak economy

Savvy small businesses can cure today's weak economy
BY PETER MINTZ
Tuesday, October 7th 2008, 4:00 AM

Peter Mintz
Believe it or not, a recession, slowdown, or whatever you want to call our sluggish economy, can be a blessing in disguise for a well-managed small business.
Though no one would prefer the present economic climate, weathering the current storm may be the best thing that happens to many small companies because it can give them an opportunity to test the value of their products and services and the effectiveness and resilience of the strategies they have developed.
Among the biggest ongoing challenges for small business is competition with larger organizations that generally have access to significant resources.
While this competition may seem formidable during good times, when economic times are hard, large companies also have to deal with reduced demand, higher fuel prices and the need to cut costs in order to maintain profits, or at least survive.
In addition, larger companies usually have much more difficult labor situations, including union pressures, employment contracts and other social and community pressures that prohibit them from maneuvering as they might prefer to keep costs and the residual sagging profits in line.
In many cases, these are issues small companies don't necessarily have to deal with, or at least not to the same degree.
Without a doubt, innovative small business owners can have greater flexibility to make alterations in their employment structures and economic underpinnings to keep their ship afloat. Well-managed small companies may also be able to offer out-of-the-box thinking and solutions to specific tough-times issues.
For instance, in this less-robust economy, one of my clients who manufactures machines that fill small bottles could not get an equipment order from the manufacturer of over-the-counter pharmaceutical products because of a tightened capital budget.
Instead, we came up with the concept of having the filler manufacturer set up a filling operation on its own premises. This solution helped both companies streamline their operations, establish new business relationships, and ultimately a stronger contract between the two companies.
The result of this new-found process is a new business and profit center for the filler, and a cost-effective secondary source for the pharmaceutical company.
Consider that if two large companies had attempted a merger of this sort, the nightmare of feasibility studies and complex procedural approval policies, not to mention the myriad of union obligations to be addressed, would probably have short-circuited the entire concept very quickly.
Despite exaggerated media focus on conglomerates, it is the resilience of small companies and their ability to adapt and potentially place themselves in an even stronger position that provides a strong countermeasure for our ailing economy.
In fact, according to the U.S. Small Business Administration, small businesses represent more than 99.7% of all employers, and employ more than half of all private-sector employees.
The key point is that in this economy, small businesses needn't hide under the covers or worse, close up shop.
They should recognize that well-run small companies have the ability to change and adapt more quickly and despite smaller resources, have more options than many of their larger competitors.
In difficult times, when all companies, large and small, may need to make crucial decisions which can often be unpleasant, the ingenious application of the little guy's versatility may be the difference between surviving or not.
Peter Mintz is a professor of management in the Monroe College MBA program, with a specialty in finance. He is also the founder and president of Fleetwood Research
nydailynews 10--7-08