Calling on their resourcefulness and resiliency, small business owners may be better prepared than others to ride out less-than-ideal economic times. They do it in a variety of ways.
Harold Neal, co-owner of Upton-Neal Interiors of Pearl, tries to operate with cash. “We don’t buy it if we don’t have the money to pay for it,” he said. “We watch our inventory and cash flow and don’t over buy. That way we don’t have to sit on it.”
He finds the state’s inventory tax an odious burden to businesses, and he hopes the governor’s Tax Study Commission will address repealing it.
“It’s a tax requiring businesses to pay on inventory every year they possess it. If you have something 10 years, you pay on it 10 years. It affects small business people more than others. We take it in the back pocket,” he said. “We’re one of the few states with that tax.”
This business owner of 40 years says small business owners are better equipped to handle an economic slowdown because they can make decisions quickly. In his own business, he is seeking out more commercial interior work and has not replaced an employee who left.
Safeway Cleaners president/owner Linda Ferguson says providing special services helps keep her business going in tough times. Those services include cleaning wedding dresses and heirlooms.
“Special services, diversification and loyalty to employees set small businesses apart,” she said. “Small business owners don’t pink slip employees. We have some who’ve been here 27 years. Also, we employ a lot of students part time, and employees here are cross trained.”
Having grown up in the business her parents started, Ferguson says small business owners are more likely to not feel too good to pitch in at whatever tasks are needed to keep things going. Earlier during the day she spoke with the Mississippi Business Journal, she was pressing clothes.
“I must be janitor and everything it takes. Running a small business is not something you can turn over to someone,” she said. “I need another employee, but I can’t afford it.”
Ferguson is carefully watching equipment purchases, having recently bought two pieces considered necessary. She also laments the lack of incentives for small businesses, saying big businesses get all of those.
“Dry cleaners nationwide could tell you this slowdown has been coming for some time,” she said.
At Stanford Feed & Seed in Carrollton, owners Harmon and Lavern Stanford are prepared to ride out slow times.
“I would say we can give better service to smaller customers, like gardeners who want to know about bugs on their plants,” she said. “We have trouble getting veterinarians out here so my son and husband help people with their animals. We have to be aware of what’s going on.”
She feels their location on U.S. 82 west of Carrollton also helps business by drawing customers from a large area, including Greenwood, Clarksdale, Cleveland, West and Lexington.
‘Cut the fluff’
Ron Aldridge, state director of the National Federation of Independent Businesses, says small businesses are best at being resilient when tough economic times come.
“While larger companies quickly look at cutting employees, small business owners continue to tighten their own belt first, usually cutting their own personal revenue from the business before anyone else,” he said. “They also try their best to hold the line on any price increases to customers because they know first-hand the pressures placed on families with any increases.
“They also know how to cut the fluff. When they make decisions, they aren’t thinking first about corporate financial reports to stockholders, they’re thinking about every one of their employees.”
Henry Thomas agrees that a small business’ size makes it easier to adjust to market chances. “It is easier to turn a small boat than a huge ship,” the director of the Small Business Development Center at Jackson State University said. “The owner is the manager, enabling the firm to react faster. The owner/manager is closer to the customer and can provide a level of services the large firms can and will not.”
Additionally, he feels small business owners can carve out a niche market that is too small or not as profitable for larger businesses. Small businesses usually have lower overhead and fixed costs, resulting in lower break even points and sales volume needed to be profitable.
Contact MBJ contributing writer Lynn Lofton at firstname.lastname@example.org.