How to Reach Small Biz

While popular stereotype depicts small-business owners as inveterate optimists, a new batch of surveys shows them feeling the effects of the economy’s long downturn. As such, anyone wishing to sell goods and services to this important market needs a more nuanced approach than ever. But it’s not as if owners are simply hunkered down, as one can gather from their growing engagement with social media as a way to build their business.

It’s a sign of how tough things have been for small-business owners that the latest Discover Small Business Watch report speaks of their confidence having “rebounded” in October. Indeed, the polling did find owners less glum than they had been in recent months. But still, those who said they see economic conditions for their own business getting better in the next six months (28 percent) were easily outnumbered by those thinking conditions will worsen (43 percent, with most of the rest saying things will stay as is). The pattern was similarly downbeat when owners were asked about the direction of the overall economy: 31 percent said it’s getting better, but 48 percent said it’s getting worse.

Polling last month for MerchantCircle, an online network of local-business owners, found an especially telling sign of the strains its constituents are feeling as they wait and wait for the economy to strengthen: 50 percent of respondents to its member poll said they “would not start their business again in today’s economic climate.” And little wonder, as 46 percent also said their business has slowed since the supposed end of the recession last June, vs. 25 percent saying it has picked up. Fifty-six percent disagreed with the statement, “The worst effects of the recession are behind us,” while just 19 percent agreed (with the rest neither agreeing nor disagreeing).

THE CASH-FLOW FACTOR
Small-business owners have not been immune to a sense that the economy has been drifting toward a double-dip recession. In last month’s release by American Express Open of its latest semi-annual Small Business Monitor polling (fielded in August and September), 45 percent of owners expressed a positive outlook on the economy, down from 51 percent in spring’s survey and from 55 percent last fall. The good news in this report was a decline in the incidence of cash-flow problems, with 53 percent experiencing those, down from 60 percent in the spring.

Even amid such modest improvement, though, cash is tight enough that 28 percent of the American Express Open respondents said they’re dealing with the matter by putting off purchases. The Discover Small Business Watch polling found 22 percent of owners planning to increase their spending on “business development,” but 46 percent planning to decrease such outlays. “They’re delaying buying that new truck or making that new hire or opening that new branch,” says Darren Waddell, vp at MerchantCircle.

Given owners’ view of the economy and the tightness of their own budgets, marketers who aim to sell goods and services to that market have their work cut out for them. But this doesn’t mean a somber tone would be suitable for marketing messages aimed at this audience. “Even when small-business owners perceive that economic conditions are poor, they’re still very bullish about their own businesses,” says Waddell. “I think there’s still room to be aspirational when you talk to them. They’ve been through a lot in the last three years. But that’s something that should be celebrated. You can’t be over-the-top about it, though, saying there’s going to be milk and honey tomorrow.”

NOT PRONE TO SELF-CONGRATULATION
Nor is it prudent to be over-the-top in congratulating owners for having managed to stay afloat through the Great Recession. Asked whether this audience would respond positively to ads that lauded them as “survivors,” Ryan Scully, director of Discover’s small-business credit card, dismissed the notion. “Small business owners don’t tend to be self-congratulatory,” he notes. “They’re focused on making the next sale.”