The Economic Advisor

Year in Review

The business environment is being inundated with change so fast that the normal hat spinning of being a small or medium business now has ones head spinning with the rotation of uncertainties. The critical point is cash flow. How to generate and maintain good cash flow while new legislation, regulation and lack of capitalization floods the environment. This year has been one where the articles addressed several of these business components that affect cash flow and strategic planning. Being informed and finding solutions allows every business executive a set of new decision points for growing their business and building a stronger financial base of operations. Future articles will bring real life lessons learned in business regarding how changing policy and legislative decisions affect business cash flow as well as introducing technology solutions that are not full of vendor cow plops but discuss real ROI perspective.

This past year has had a lot of hubbub about corporate governance and risk management. The focus has been on the large public companies and financial markets. Yet, the legislation that has been passed is trickling down to the small and medium privately held businesses. One area that the Feds would like to do would be to push the requirements of Sarbanes – Oxley (SOX) down to all business. But, thankfully, the Supreme Court is going to hear a suit brought that challenges the Constitutionality of the legislation. Did you know that even with the small business 404 exemptions that SOX has cost publicly traded small business with market capitalization of $75 million or less paid a median of $1.14 in audit fees for every $100 in revenues. This is data from a study released by the GAO in April 2006. Next year, the articles will keep flowing the information on policy that affects corporate governance, risk management and other strategic decision making here and at my blog.

The fact that many companies need to reduce cost to ensure cash reserves look to how they will innovate when it comes to technology. This decision should always come to what is the Return On Investment (ROI) and how that will improve cash flow. In today’s cost constrained environment, there are opportunities to utilize technologies as mentioned last year. During this past year, there have been a number of new technologies and consolidations. Making choices for the most robust and cost effective solutions is a challenge in a competitive market. Next years articles will continue to review technologies and evaluate the business model implementation for maximizing efficiencies and cash management.

During 2010, new articles will continue to sift through policy issues on a national basis that will affect small and medium businesses. What you and I know and the politicians forget, even though the statistics are from the SBA, is that over the last decade, small businesses have generated 60 to 80 percent of net new jobs. Yet, small businesses released some 3.1 million employees to the street because of lack of capital and bad policy by Congress. Remember, there are about 10 million unincorporated self-employed small businesses and about 6 million incorporated self-employed in this nation. We make up 97 percent of exporters and produced 28 percent of the known exports. Small businesses employ 41 percent of high-tech workers and produce 13 to 14 times more patents per employee than large patenting businesses.

The 2009 Presidential report states that “During these two past recessions, firms with fewer than 20 employees were the only ones with positive net job growth; the larger category of small businesses with fewer than 500 employees, as well as large firms with 500 or more employees both experienced net employment losses.” Therefore, all of us Small Business Executives (owners) need to shout with a common voice to Congress and the Administration regarding bad policy that impacts us as they only address the large corporation which are a small percentage of the real economy drivers.

With this reality, the challenge to every business that falls into the SMB (Small Medium Businesses) category is to get involved politically at your state and national level. SMB’s drive the economy and MUST engage policy makers to do what is Constitutionally correct for enterprise and not focus on Wall Street and the major corporations. SMB’s know that the bail out has not reached the environment. We don’t really want a bail out that causes us to be beholden to a government, we WANT good policy that does not impede us from hiring new people, growing our customer base and increasing our cash flow. Heck, we don’t mind paying taxes if they are just and used wisely. This is an election year so get out of your chairs and get engaged.

The intent of future articles is to ensure that 2010 brings solid technology discussions especially in the area of Telepresence and Cloud Computing. Let’s cut through the hype and the vendor cow pies and get to what will truly allow us to maintain and increase cash flow.

Talking about Cash Flow, next year’s articles will take some time to discuss the major area that every business has issues with – understanding financials.

Have a great Christmas and looking forward to a super New Year.

Tom Niewulis, Jr. is passionate about small business. He works with small businesses to develop management teams in implementing organizational strategic vision decisively by using good judgment and initiative to lead and develop organizational teams. As a member of the National Association of Corporate Directors, Tom brings insights to companies regarding leadership, risk management and corporate governance such that they grow in efficiency and market opportunities. He shares the inner workings of business from years of in the trenches experience and presents knowledge with levity.

Check out Tom’s personal blog http://lifeslessonsinbusiness.blogspot.com/ and business blog http://www.ncdcs.com/ncdcsblog.html