Entrepreneurs Worry: Will the Economy Do a Double Dip?

By Carol Tice

For a while there, things were really looking up. Retail sales rose for months on end. People were buying houses.

Now, it's all come crashing back down. June retail sales declined. After the federal new buyer credit expired, home sales sank substantially in July.

Now, entrepreneurs are biting their nails and wondering if the economy is headed down again. Experts are saying basically, nothing else can go wrong now, or we're going back in the tank.

I think the answer to whether a double-dip is headed toward your business depends on where you are and your industry. In California, for instance, the recession has pretty much never let up. The state started issuing IOUs this summer, instead of paying its bills to social-service agencies and others. Tracking markets with the highest business bankruptcy rates, California cities are prominently featured along with Houston, Dallas, Denver, Chicago and Atlanta. If you're a retailer selling a big-ticket item like, oh, cars -- I think I'm not going out on a limb too far when I say that for you, the recovery is probably a ways off.

But there's still lots of life in this economy. Up here in Washington State, the downturn was never that extreme. I know a lot of other entrepreneurs who've kept roaring along straight through the past two years.

Clearly, whether the economy heads back down or just keeps sort of slogging slowly along, the economy is not going to come around and lift all boats again anytime soon. I think there's too much energy spent worrying about the general state of the economy, and not enough spent focused on how your one, individual business can succeed in this environment. The economy's a great excuse for failing, for those who don't have the drive to figure out a success strategy.

It's not a great time for business owners who want their business to churn out cash while they golf. It's all hands on deck, for those who want to succeed in this unhelpful economic climate.

It's a time for entrepreneurial creativity. For seeing the opportunity in how the economy is changing. The advantage is to those who're thinking about the trends -- crowdsourcing, the new frugality, the desire for quality food, quality experiences -- and finding ways to meet consumers current needs.

Those who are spending less time worrying about leading economic indicators and more time crafting a relevant business strategy are very high on their company's prospects. I think that's the best indicator of how entrepreneurs can thrive in the downturn, whether it's single or double.

What's your strategy for succeeding in the tough economy? Leave a comment and tell us about it.

Photo via Flickr user pattyequalsawesome

First-Half 2010 in Review

By Carol Tice

It sneaks up on you, doesn't it? Half of 2010 is already behind us. For small business, the first half has been a mixed bag.

A new report from private-company research firm Sageworks shows small-business sales stayed down so far in '10, even a bit farther down than in '09. If you make zero the sales level in late fall '08, when the downturn really got serious, sales were down more than 6 percent from there.

The interesting part: Net profits stayed the same, at an average of around 6 percent. That to me indicates serious cost-cutting going on, to maintain those margins as businesses de-leverage their fixed costs due to lower sales. But profits are still there.

There are many signs that the U.S. economy is improving, whip-sawing stock market notwithstanding. Cargo volume snapped a two-and-a-half year streak of declines back in January, and retail container traffic is rising again. More retailers ordering more stuff means their sales are improving.

Big retail seems to have done better than small business. The U.S. Census figures show retail sales went up year-over-year every month since last November. The gain isn't huge though, and the National Retail Federation forecast sales will rise just 2.5 percent this year overall.

In the restaurant industry, hiring is improving, People Report Workforce Index reported earlier this month. More than 40 percent of operators said they expect to add hourly workers in the back half of this year, while just 5 percent planned layoffs. The study showed hiring accelerating in the remainder of the year.

Many consider the restaurant sector to be a leading indicator of economic improvement. Apparently, we don't eat out when we're worried about money, but at the first glimmer of optimism, off we go to treat ourselves to a restaurant meal.

There are still worries on the horizon that the economy could head back down, which the whip-sawing stock markets reflect. Some observers are fretting about the end of federal stimulus money, which is generally winding down. But there's hope even there, as Congress is acting to extend unemployment benefits again, the end of which concerned many. Financial turmoil abroad is also a potential problem that could ripple back to us in the States.

Personally, I think the economy is picking up and there's no turning back now. There's just too much entrepreneurial energy out there. You can only keep it down for so long before it's just gotta pop.

What do you think? Will we double-dip, or is the downturn over? Leave a comment and let the BVR Times know.

Photo via Flickr user Tim in Sydney