Business Up Front - January 2002

Business Up Front

Small Business Bearing Burden of Federal Regulations

A new study shows federal regulations cost U.S. businesses $497 billion in 2000, with these expenses falling disproportionately on small business. The study, entitled The Impact of Regulatory Costs on Small Firms, was produced under contract with the advocacy division of the Small Business Administration (SBA). While federal regulations cost firms with fewer than 20 employees nearly $7,000 annually per employee, large firms paid an average of $4,463 – 64 percent less. One of the authors of the study, Thomas D. Hopkins of the Rochester Institute of Technology, remarked, "Whether all this regulation is delivering the protections intended in reasonable ways deserves closer attention in light of the size of its cost." The full text of the study may be obtained at the SBA’s Web site: sba.gov/advo/research/rs207tot.pdf.

The Burden of Federal Regulations by Firm Size (For Year 2000)

		Cost per employee for firms with:
Type of Regulation	All Firms	<20 employees	20-499 employees	500+ employees
All Federal Regulations	$ 4,722	$ 6,975	$ 4,319	$ 4,463
Environmental	$ 1,213	$ 3,328	$ 1,173	$ 717
Economic	$ 2,065	$ 1,616	$ 1,648	$ 2,485
Workplace	$ 779	$ 829	$ 873	$ 698
Tax Compliance	$ 665	$ 1,202	$ 625	$ 562

Managing In Difficult Economic Conditions

Next to opening the front door on the first day of business, surviving an economic downturn is likely to be the greatest challenge most business owners will ever face. Donald J. Fletcher, president of the George S. May International Company, a management consulting firm, provides several suggestions to help any company weather an economic downturn.

 1. Don’t panic at the first sign of a slowdown. You don’t want to make a downturn in your industry a self-fulfilling prophecy for your business. Now is the time to evaluate your business, objectively measure how you are doing, then take specific steps to move to a solid business footing.

2. Don’t tie yourself too closely to one customer. A single very large customer can appear to be blessing, but it also can lead to a significant danger.

3. Don’t focus your efforts in only one locale. While your area of the country may be experiencing a downturn, another part of the country or another nation might need exactly what you offer.

4. Get the money. Be prompt and direct about collecting payments.

5. Convert your costs to variables. The fewer fixed costs you have, the less you can be hurt by a downturn. Look for ways to farm out work, including sub-contracting. If salaries are big costs, move your compensation plan to an incentive-based structure.

6. Be the low-cost provider. In a downturn, people are looking for ways to cut expenses.

7. Keep your inventory to a minimum. Like any fixed cost, you want to have as few or as little as possible to give yourself room to adjust to changing circumstances.

8. Listen to the experts. Build your information network by talking to your bankers, your suppliers and other business people in similar situations. They can see clues others might miss and provide information from another perspective.

9. Negotiate for services. When times are tough, everyone in the business community is working harder to generate business. Don’t be afraid to ask for a better price.

Moving Forward by Doing It Backwards

Marketing guru John R. Graham of Graham Communications suggests, "There are times when getting it right means doing it wrong – going against the accepted wisdom." He offers the following "backwards" marketing concepts to help companies take a different approach to marketing:

Advertise when others pull back. In a slower economy, there are far fewer ads, which can translate into greater visibility for the ads that do run.

Use direct mail when everyone else is on the Internet. E-mail and broadcast faxing are popular because they are quick and cheap, but many people have come to regard them as "junk." Now may be the time for a carefully crafted direct mail appeal.

Get glued to prospects. Instead of dropping a contact forever because he does not sign your order today, develop strategies for cultivating him so he will think of you when he is finally ready to buy.

Focus on what you can do for your customers. Everyone gives lip service to the idea of "helping" customers, but how many really do? Be creative in finding ways you can provide value.

Stay the course. The major failure in sales and marketing is failing to stay on track. Instead of having a "program of the week," stay with one idea and give it a chance to work.

Happy New Year

On February 12

If you have already broken the resolutions you made on January 1, take heart – you have another chance to make New Year’s resolutions on February 12. That’s the day the Chinese will celebrate Year 4699, the Year of the Horse. The Chinese Lunar New Year is the longest chronological record in history, dating from 2,600 BC. Like the Western calendar, the Chinese lunar calendar is a yearly one, with the start of the lunar year being based on the cycles of the moon. A complete cycle takes 60 years and is made up of five cycles of 12 years each. The Chinese calendar names each of the 12 years after an animal. The animal ruling the year in which a person is born is believed to have a profound influence on personality. People born in the Year of the Horse are said to be active, energetic, hot-headed and impatient. They love crowds and enjoy traveling, are adept at handling money and are hard workers. If you were born in one of the following years, you are a horse person: 1930, 1942, 1954, 1966, 1978 or 1990.