We all know it’s a bad economy, so why pay attention to monthly economic reports? It’s a fair question, and one that a lot of small business owners wrestle with.
The truth is that monthly economic reports can be valuable to small business owners. It’s a matter of knowing what each monthly report focuses on and what information is valuable for you and your business.
I thought it would be helpful to outline some of the reports available and how each differs. Below are a few of the economic reports on which the media focuses consistently.
The Government Jobs Report
The Department Of Labor releases a number of jobs reports every month. The “United States Department of Labor Employment Situation Summary” is one many pundits care about.
This one provides the official unemployment rate and the nation’s employment gains or losses, based on answers from surveys sent to households and business establishments. It’s a good measure of where the American economy stands overall. But it is by no means the be-all, end-all indicator, particularly for small business owners, as only 40 percent of the establishment surveys come from businesses with 20 or fewer employees. The numbers reflect everything from side-business sole-proprietors to companies with tens of thousands of employees.
If your customers are all over the board in terms of size, this will show how they’re doing. But if you cater to a niche market – like businesses between 50 and 200 people, for example, you won’t have much insight into your customer base.
Challenger Job Cut Report
Challenger, Gray & Christmas brand themselves as “the original outplacement company,” so the focus of the Challenger Job Cut Report isn’t how the economy’s growing, but how many jobs companies are cutting. The June 2011 report stated U.S.-based employers announced 41,432 job cuts for the month, an 11.6 percent increase.
Why care about just the cuts and not how many jobs were added in a month? Frankly, we all need a reality check that downsizing happens, even in a good economy. Small employers aren’t required by law to announce layoffs and the Challenger report doesn’t account for them, but the majority of businesses with 100 employees are required to report layoffs. So, if your customers are corporations, paying attention to how they’re scaling up or down can give you insight into where your production may need to go. Also, if you sell to consumers, the higher this number the more likely your sales could be impacted, as your customers may not have as much income to spend with you.
ADP National Employment Report
ADP’s National Employment Report focuses on the payrolls of their customer base, which, according to their Website, includes companies of all sizes – small, medium and large. The challenge for small businesses is that their small business numbers (establishments with 1 to 49 employees) is not made up entirely of small businesses – it can include small locations of large companies. For example, a large national clothing retailer with thousands of stores would have the employment levels at each of their stores reported in the small business segment numbers, so you’ll need to take their definition of “small business” with a grain of salt.
Really, this report is useful for getting a glimpse at what’s going on with bigger businesses.
Our report at SurePayroll, the SurePayroll Small Business Scorecard, analyzes payroll data from 33,000 small business customers. Our average customer has 7 employees. While our monthly economic report won’t provide insight into medium or large companies or the government sector, it’s a good barometer for small businesses. It shows what’s happening on Main Street.
The Scorecard also includes economic data for 35 U.S. metro areas’ small business. Want to know how Atlanta’s small business economy compares to Chicago’s? You can easily see year-to-date employee and paycheck size info for both cities from one Webpage.
I realize there are dozens of other reports out there. And they all make great fodder for the business talk shows to fill air time. However, at the end of the day, the only ones that matter to you are the ones that are relevant to your personal and business situation. When you’re your own boss, you’re also your own strategy department. Knowing which data is most relevant for you from the various reports out there can help you make the right strategic decisions about your future prospects.
One of the reasons I love my job is having access to so many customers who are bright entrepreneurs. When you treat your customers like the gifted business people they are, you’ll be surprised how much they can teach you.
A few weeks ago I was curious to see what SurePayroll customers consider their most valuable learning experiences. For years, I’ve said the best learning tool is making mistakes — I even give one lucky employee an award for the year's best new mistake every year. After sending a survey about their most valuable learning experiences, I learned quite a bit from their real-life stories and what their experiences have taught them.
Many of their learning experiences fall into three main categories, ranging from practical office tactics to the philosophy of running their businesses.
1. Effective employee management is a must.
One of my customers summed it up nicely: “I have been in business for over 35 years, and I’m not sure any one experience is the most important. But one thing is for sure: Hiring the right people is critical to anyone's success.” I’ve learned over years that hiring is one of the most difficult aspects of running the show and that the overwhelming majority of my customers agree.
And they’ve also learned that part of having the right people is firing the wrong people, and doing so quickly. That may sound cold, but it’s a reality business owners need to face. A few customers discussed how they struggled in their first few years because they didn’t want to be the small business owner who fired people. Or they weren’t checking candidates’ backgrounds and references properly.
Once the right employees are on board, you have to communicate the vision of your company and make sure they’re aligned with it. And as tough as it sounds, you’re going to have to give your employees breathing room to do some things their way, and to make the occasional mistake. You can trust me that when employees aren’t belittled for making mistakes, it’s good for your business. But you don’t have to take my word for it — many of my customers feel the same way.
Employees want to work somewhere they feel welcome and appreciated – and like they can be themselves. As another customer said, “We all spend so much time at work, it is important to make it a fun environment. When people feel good, their work performance improves. It’s a win-win situation.”
2. Sales and marketing won’t take care of themselves.
Ralph Waldo Emerson is famous for a lot of good reasons, but he couldn’t be more wrong when he wrote “Build a better mousetrap and the world will beat a path to your door.” My customers agree that your mousetrap won’t sell itself.
Many SurePayroll customers started their own businesses because they loved what they were doing, and wanted to concentrate on it full-time and be their own bosses. Then they found out people weren’t beating paths to their doors, even though they offered top-notch products or services. They needed to spread the word via marketing and acquire new business by spending time on sales.
One of my customers learned this by accident, quite literally. After an injury took him out of commission from his carpentry, he needed to hire a replacement for six weeks. That’s when he discovered his strength wasn’t just in his carpentry but in promoting his business. He wrote that “There were plenty of competent carpenters willing and able to take my place as lead site carpenter. I focused my efforts on sales and marketing. Sales picked up significantly. My net income doubled in the span of a year and grew by 50% more the next year.”
Taking on sales and marketing yourself might not be the answer. If you want to stay focused on your trade, let someone else take care of it. The joy of owning your own business is that you can focus on your strengths and outsource your weaknesses, whether that means relying on services or hiring competent employees.
Even the carpenter-turned-salesman would have done it differently: “The next logical step in that duplication would have been to replace myself in my sales and marketing duties, too. Remember, the duplication of effort can be applied to all people in all positions performing all tasks. My end goal could have been to become CEO where all lower level tasks were delegated to highly qualified employees.”
3. You’re your own boss—and your own teacher.
Yes, hiring experts can help you grow your business, but at the end of the day, you’re the one who has to keep learning. As my customers can attest to, education covers everything from gaining new skills to realizing your limitations.
What’s the best place to begin your education? One customer offered a great starting place: “Read. Sounds simple, but it is one of the most important things a business owner can do to improve his or her business. While it is great to have a mentor, and I have many, books are portals to some of the brightest minds from our past and present.”
In addition to traditional education like reading and business school, many customers stressed the importance of on-the-job learning — taking on projects that require them to become experts. One customer wrote, “I had a client ask me to work on a project that required me to do educate myself about the details and the best way to accomplish the task. Rather than tell them, ‘No, I do not have those particular skills,’ I tell them, ‘I will look into it and give it a try.’ So far my clients have been pleased with the results, and I continue to learn and expand the services I can provide.”
Unfortunately, sometimes you learn the hard way. A few customers got caught up in the whirlwind housing market a few years ago before the crash, losing hundreds of thousands of dollars on their office space and housing purchases. Learning not to succumb to pressure is a hard pill to swallow, but an invaluable one.
What’s the most valuable learning experience you’ve had as an entrepreneur? Please comment below so we can all learn from your experience.
The June SurePayroll Small Business Scorecard is a bit of déjà vu, looking similar to last month. While wages inched up just a sliver this month, bringing us to -0.1 percent for the year, hiring stayed put at -2.3 percent for the year.
What swung enough to have me take notice was our small business optimism number. Last month I reported that it skyrocketed to 75 percent – three in four business owners reporting that they were optimistic about the small business economy was fantastic news. But we’ve lost some momentum in June. Now two in three are optimistic, and I was very curious why the change in sentiment.
In looking over the reasons business owners gave for being pessimistic, the biggest pool had to do with frustration with the government, including its inaction. “The political environment,” “uncertain tax policy,” “failure to address over-regulation, job creation, and keeping business in the US,” and “I see no major changes by our governing bodies to improve the situation at hand,” are just a few.
I’ve said it before, but I believe it bears repeating – no action is the worst decision, as it produces uncertainty. Not everyone will agree on which way to take our policies, but the unknown is the scariest place to be. Small business owners are waiting for the government gridlock to end. They want the government to make decisions on a variety of issues, including the debt ceiling, spending and taxes. Without certainty on direction, you have more business owners who are frozen and frustrated.
Mind you, more small business owners are optimistic about the economy than pessimistic, most saying the reason being that they’re growing or that they simply choose to be positive. But I’d hate to see us go back down to April’s near 50% optimism level, and I think one way to keep it higher is for the federal government to take action and create certainty.
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