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I own a small business. Over the past four years we have seen no recovery. Sales are off 55% from 2007.  Sales seemed to have reached a bottom about two years ago . Then in 2012 we slipped another 10%. Since the beginning of the year , business has dropped off  to a level we haven't seen since the depression/recession months in 2009. We actually had a better year over-all, but the first few months were dead. That's the way it is now.

Thinking it was something we weren't doing or something bad that we have been doing, we waited it out. We did some customer only email campaigns, lowered prices, and did three adwords campaigns.  Now it's mid February and there is no hint of improvement. I've called my small network of business owners to see how things were. It's been pretty much the same. It's slowed to a trickle. There was a small independent rep firm that was doing "ok" as they came off fresh from the annual N.A.M.M show...

That was until yesterday when a company that the firm had represented for 25 years called and told the principal they were firing all the reps and upper management. They were folding the company into another one and would have all products made overseas and distributed by one company here in the US.

 I looked at the National Federation of Small Businesses Index.  Enclosed are the readings they have as of the 12th of this month.

Sales: Sales trends remain overwhelmingly negative for small employers, with still more owners reporting declining sales than experiencing positive sales trends. The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past three months improved 1 point in January, landing at a negative nine percent. For context, the five-year high of a net four percent was reached in April of 2012. The low for this cycle was a net negative 34 percent in July of 2009. Nineteen (19) percent of owners still cite weak sales as their top business problem. Seasonally unadjusted, 19 percent of all owners reported higher sales (last three months compared to prior three months, up 1 point) and 32 percent reported lower sales (up 2 points). As consumer spending remains weak, so do the expectation for real sales among small employers. The net percent of owners expecting higher real sales volumes improved 1 point to a negative one percent of all owners (seasonally adjusted), still 13 points below the 2012 cycle high of net 12 percent reached in February 2012. Not seasonally adjusted, one quarter of owners surveyed expect improvement over the next three months (up 5 points) and 32 percent expect declines (down 8 points).  

Job Creation: Job creation was positive in January, but ever-so-slight. Overall, 11 percent of surveyed owners (unchanged) reported adding over the past few months, and nine percent reduced employment (down 4 points), seasonally adjusted. But the vast majority—the remaining 80 percent of owners—made no net change in employment. Forty-three (43) percent of owners surveyed hired or tried to hire in the last three months and 34 percent (79 percent of those trying to hire or hiring) reported few or no qualified applicants for open positions. Eighteen (18) percent of all owners reported job openings they could not fill in the current period; January is up 2 points from December, but still historically low.

Inventories: The pace of inventory reduction continued in January, with a net negative seven percent of all owners reporting growth in inventories (seasonally adjusted), 3 points better than December, but still more owners reducing stocks than adding to them. Unadjusted, nine percent reported growth in inventory stocks (down 2 points) and 22 percent reported inventory reductions (up 1 point). For all firms, a net negative one percent (down 1 point) reported stocks too low, historically a good level of satisfaction with inventory stocks. Plans to add to inventories remained weak at a net negative seven percent of all firms (seasonally adjusted), 3 points worse than December.  

Capital Spending: The frequency of reported capital outlays over the past six months rose 3 points to 55 percent. Of those making expenditures, 39 percent of owners reported spending on new equipment (up 3 points), 21 percent acquired vehicles (up 3 points), and 12 percent improved or expanded facilities (down 1 point). Five percent acquired new buildings or land for expansion (down 1 point) and 11 percent spent money for new fixtures and furniture (unchanged). Overall, there was no sign that capital spending might be returning to levels more consistent with past recovery periods. Twenty-one percent of owners plan to make capital outlays in the next three to six months, rising 1 point from the month prior. Six percent characterized the current period as a good time to expand facilities (down 2 points), historically a very weak number. The net percent of owners expecting better business conditions in six months was a net negative 30 percent, 5 points better than December but still dangerously low—the fourth lowest reading in nearly 40 years.( Bold- my emphasis )

Capex spending is a leading indicator of where small business is headed. Having the fourth lowest reading in History backs up the low level of small business confidence. This is a number that feeds on itself. I also noted that many small business people complained of sales dropping before the fiscal cliff and staying down after which many here, including myself predicted.

Some additional insight from the New York Times

The struggles of small businesses ripple through the rest of the economy. They are reluctant to invest in expensive capital equipment, for one.

 Mr. Starkey said that eight or nine years ago he could have justified investing in a $25,000 piece of equipment that would help him make a particular piece for a Ford Mustang, since he knew he would be able to earn back his investment in six months. But today, he doesn’t know if he will be able to get a return in six months or two years, and “having that kind of money tied up in one item is just too great a risk.”

“Until the small-business sector starts to feel better,” he said, “the rest of the economy isn't going to feel much better either.”

Note this survey was done for the Month of January. We won't know how February is shaping up until Mid March. So I thought I would generate a poll here and see how Kossacks who work for a small business or own a small business are doing.

How is your Business doing since the start of 2013?

19%4 votes
19%4 votes
14%3 votes
23%5 votes
0%0 votes
4%1 votes
0%0 votes
0%0 votes
19%4 votes

| 21 votes | Vote | Results

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Comment Preferences

  •  Our biz is seasonal so we are working on (7+ / 0-)

    Our numbers & coming up with ways to improve our efficiency. We are also working on improving our rental income. That would pay a lot of our expenses & income.

    The evil Rs and their masters want to destroy us regular Americans and they are winning, one family at a time. They can go to the devil. We will persist.

    •  Thanks for describing your Business (6+ / 0-)
      Recommended by:
      JoanMar, marleycat, weck, Odysseus, kurt, cactusgal

      I have a digital printing business. Our main niche has been medical research posters. However, research has been cut substantially , especially in state run institutions. One of our customers had secured 250,000 sq feet in expansion space. They had moved about 50% of their research group over and then were abruptly told to move it all back to the original building.

      Apparently the university had second thoughts . We still haven't found out what they have done with the building.

      •  Diversification and a different approach? (3+ / 0-)
        Recommended by:
        weck, a2nite, Dburn

        I used to work in a number of small printing places (lithography/typesetting) that went out of business in quick succession as desktop publishing and in-house printing at large universities and medical research institutions took over in the late 80s. The companies didn't adapt fast enough, diversify their product lines, or try to break into different sectors fast enough...instead, they kept stubbornly riding out waves of funding cuts and client losses, sticking to their old marketing/sales approaches (though ramping those up in intensity) and not doing enough to brainstorm new ways of doing business. It was a shame; some of those companies had been around since Victorian times (this was in Boston, a place with no shortage of schools, hospitals, & publishers).

        I currently work for a consulting firm working mostly with states and state agencies, and while it is true that government funding is being cut for research in some areas, it's not being cut everywhere. There's still some $$ out there in educational, social science and public health research, as well as in training materials for various federally funded initiatives. We're so busy we are adding staff. We spend a lot of $$ with local printers producing technical reports and social marketing materials.

        If we tried to gin up business using adwords or mailers or email blasts we'd be doomed; in today's business climate, those mostly go into the circular and spam files of low-level employees and never reach decision-makers. Instead, we dedicate about 20% of staff time to pursuing state and federal contracts, RFPs, RFQs, and grants. Every state has 'em. Becoming a pre-qualified vendor for a host of agencies in a bunch of places may replace the business that you've been losing in the sector you used to rely upon. And it can pay off: we've been increasingly profitable in each of the years that the firm has been in business...even in the worst recession year (because some of those contracts are multi-year contracts that help you ride out the bad times).

        Wish you the best of luck!

        "When did it fall apart? Sometime in the '80s / When the great and the good gave way to the greedy and the mean." - Billy Bragg

        by Vacationland on Fri Feb 15, 2013 at 06:53:43 AM PST

        [ Parent ]

  •  Strangely enough, our business turned the (7+ / 0-)

    corner into profitability in 2009. I like to say it's because of Obama, but it is more likely due to ten years of hard work building up a loyal customer base and running things leanly. As a retail store, the last two years have been flat, but bearable, due to two stores in our center being vacant, one of which was the anchor. As of the beginning of the year, both spaces have been taken over by vibrant new businesses (although we lost another small business in the last year) and we are up in sales so far for the year.

    A society grows great when old men plant trees in whose shade they know they shall never sit. - Greek proverb

    by marleycat on Fri Feb 15, 2013 at 05:44:59 AM PST

  •  We carry higher end lines of lawn care equipment (2+ / 0-)
    Recommended by:
    Dburn, cactusgal

    in our 2 person business.  We thought that repairs would carry us as sales slowed, people still need to cut the grass.

    Then we had a dry summer; nothing broken, nothing needs fixing. High end purchasers evaporated.

    We are hoping that "Phil" was right about an early spring, we just need to get through Feb and March.

    Our business model has always been lean, and we don't have to rely on it to survive, but it is past the time where we should be putting cash into it, we have very little debt and pay barely anything to ourselves.

    We are getting discouraged.

    If love could have saved you, you would have lived forever. &

    by weck on Fri Feb 15, 2013 at 07:16:37 AM PST

    •  I had to refresh equipment (2+ / 0-)
      Recommended by:
      weck, cactusgal

      this year. There simply was no choice. I had a terrific printer that has worked flawlessly for seven years...but when it went down it became very clear that a new printer would be only slightly more than the cost to revive it for an unknown length of time. It was all done with cash during the slowest time of the year.

      It has been discouraging.  I found our business is seasonal too. Conversely summer is the worst. We have about 4-5 months out of the year now that are ok. The rest have gotten progressively worse. There is business out there but I think there is still way too much capacity vs demand.

      •  We had to replace a compressor and purchase a (2+ / 0-)
        Recommended by:
        cactusgal, Dburn

        new computer to access some of our manufacturers' sites.
        We did find a client who needed some custom machining done, but we needed a new piece of equipment to do that job, too.

        We have agreed we must keep one of out suppliers at arms length until the tide turns, and it would help if we could sell our used items, never a problem until last year when the grass stopped growing.  I'm hoping it was just part of the hold on spending that seemed to accompany the "end of the world is coming" stuff.  We did sell out of all our generators.

        If love could have saved you, you would have lived forever. &

        by weck on Fri Feb 15, 2013 at 08:39:07 AM PST

        [ Parent ]

        •  Having no debt and low fixed costs helps (1+ / 0-)
          Recommended by:

          but cash is always low too if the sales are off. What I hate more than anything is what I call the Trickle Order Syndrome. (TOS) That means an order will come after a very long time. Then  to fill the order,  one has to buy supplies and do get ready that exceeds the sales value of the order, yet you have to do it anyway.

          Another problem with TOS is the psychological effect. If a small order comes in after a stretch of dry nothing,  an unnatural feeling of resentment comes up. I've talked to others that have had the same problem. Here we are dying for business and someone wonders in  and all I can think of "is that it?" HAHA

          Keeping Inventory just right is the hardest part. The last thing I want is to have to overnight something in if I get the dreaded TOS.

          I agree about suppliers at arms length. The old days of helping someone out who needs to book some sales are over.

           I have also noticed that stuff that used to take a day to get in now takes 10 days. I did have one supplier call me . I said "You musty be digging at the bottom of a dry hole today to  call me". We both laughed . I asked her to tell me with no BS how it was going. She said she had spent the last few weeks reviewing order histories from customers in her territory. She said one thing jumped out. None of the customers were even close to what was done with the company in 2004-2006.

          Now I'm even leery when there is a good month. I tell myself "Business Spike". If it goes on for four months or longer then I'll notch it up , but the longest it's gone on is three months and even then the volume was still 25% off the same months in 2007. If my attitude is one that is prevalent it's will be hard to get rid of the self fulfilling prophecy that dampens economic recovery and helps a recession get much worse.

          How are your margins?  Mine are too good right now, which means my prices are probably too high. I 've been doing a price audit for the last few days and I see where I need to make adjustments. Input prices are going down a bit. About 3% across the board. But, there has to be a happy medium between a healthy gross margin and gross dollar generation every day. That means we'll have to experiment with pricing.

          It never gets easier does it?

          •  We are making money on repair work, but are (1+ / 0-)
            Recommended by:

            willing to bargain down to nearly nothing to make a sale and get equipment off floor plan. (credit).

             It is a fine day when we sell something that has already been paid for, but now, for the first time, we have to pay interest on some of our floor plan stuff because we weren't able to cover its cost within a year.

             Our last floor plan came in at 300 days instead of 360 because we couldn't in good faith order more volume than the previous year.  It must end soon.

            If love could have saved you, you would have lived forever. &

            by weck on Fri Feb 15, 2013 at 05:25:14 PM PST

            [ Parent ]

            •  What are interest rates like on floor plans (1+ / 0-)
              Recommended by:

              these days?

              I used to sell B2B in the 80s and most of my dealers had some sort of floor plan for Pianos and Organs. The interest rates then were a punitive  18%. They were lucky to turn their inventory 1.5x a year .  Many sold products out without paying for them, once they got friendly with the floor checkers. I bailed one of them out when I helped him fill out a written deposition. The $50,000 suit was reduced to $2500.

              Imagine a $500,000 inventory and $50,000-$80,000 in annual interest charges and you get a feel for what it was like to sell Pianos and Organs after Interest rates were run to the sky in the recession of 80-82 and for many years after.

              Many of those dealers ended up dying young. The stress was unreal.

              •  The rates are still punitive, but are now closer (1+ / 0-)
                Recommended by:

                to 10 %.  Our plan was to own our inventory by 5 years in, and we would have done that too, if the banks hadn't collapsed the housing market.  People who buy a house nearly always end up with a different lawn mower.  We are meticulous about paying for sold inventory, but the margins are small and disappear on floor planned stock.  

                If love could have saved you, you would have lived forever. &

                by weck on Sat Feb 16, 2013 at 07:13:51 AM PST

                [ Parent ]

  •  Tiny manufacturing company/renewable energy. (0+ / 0-)

    Few signs of life for the past six months. IMO, banks are responsible for most of this--they aren't lending no matter what anyone says.  No contracts, no bank loans to build inventory, no interested investors, no govt. spending, no stimulus - it's a recipe for a chain reaction disaster.

    That said, the O administration appears to be working behind the scenes (they have to because of the rw obstructionists) to help small businesses.  I just hope it will be in time.

    Good luck to all of us - we're going to need it!

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