Barbara’s Blog

The national unemployment rate in May 2012 was 8.2%. Five states (California, Nevada, New Jersey, North Carolina, and Rhode Island) and the District of Columbia had considerably higher rates (as much as 11.6% in Nevada).  For those who are unemployed, or underemployed, the lack of job opportunities has meant personal and financial challenges. They have been forced to tap into or even drain savings, rely on help from family and friends, or even turn to government programs for assistance. But their individual experiences pale in comparison to the loss to our country — it’s been a real talent and money drain.

My daughters are good examples. Each has a graduate degree but both have been stymied by the economy to make full use of their talents. My older daughter was laid off from her prestigious job as a clothing designer with a Fortune 500 company at the start of the recession. Since then she hasn’t been idle; she earned a master’s degree, had a baby, and continued to do contract work in her field. My younger daughter, who does advocacy for a nonprofit organization, has been essentially locked into a job with no prospects for growth; she even had to take a pay cut. Think of the designs that never got made, and the programs that never were advanced.

Now multiply these examples by the millions of similarly-situated, very talented, well-educated individuals who are unemployed, underemployed, or stuck in dead-end jobs. The country has lost the benefit of ideas, innovations, sales, and other indices of productivity. The country has also lost the ancillary benefits that result from the income that these people could have earned. Think of the taxes they would have paid, the houses and furnishings they would have bought, the investments they would have made. Also, think about the drain on the public resources to pay for unemployment benefits, food stamps, and other assistance programs.

Bottom line: I’m a big proponent of self-employment — creating your own job by starting your own business. But this route is not for everyone. The vast majority of people prefer, or are better suited, to be employees in someone else’s business. The sooner the economy starts to move at a much better pace than it currently is, the sooner the country will benefit from improvements in employment.

The U.S. Small Business Administration (SBA) releases quarterly statistics on business churn. What is this and why should you care about it? Business churn is defined as changes in the number of births and deaths of firms in this country. When business births (startups) increase and business deaths decline, the resulting rise in the number as business churn is good. “Business churn is needed to keep the economy from stagnating,” says the SBA.

Business births are vital for employment creation. The government says that small firms (20-499 employees) were responsible for three-quarters of job creation from the end of the economic downturn (from 2009 on). However, now (since 2011) even smaller firms (1-19 employees) are creating jobs.

Business bankruptcies—one of the ways in which businesses die—are on the decline for firms of all sizes. In the last quarter of 2011, there were 11,149 bankruptcies. In the first quarter of this year, there were only 10,998, showing that business deaths are on the decline.

Clearly, things are moving in the right direction. However, we are nowhere near pre-recession numbers in business creation. The number of unincorporated businesses created in 2011 is markedly below the number in previous years: 10,586,000 in 2006, 10,413,000 in 2007, 10,080,000 in 2008, 9,831,000 in 2009, 9,681,000 in 2010, and only 9,449,000 in 2011. It’s too early to pop the cork and celebrate the return of a strong economy, despite the statistical rise in business churn.

Word on the street (from small business owners I know) is that they are largely still just hanging on. They aren’t expanding. They aren’t hiring. They aren’t buying new equipment (other than what is absolutely necessary). There are “for rent” signs everywhere, with store fronts and office space showing significant vacancies. My personal view on business churn is not as rosy as the SBA’s, but I sure hope things change real soon!

The U.S. Census Bureau is the prime source of information on the economy, reporting regularly on retail sales, manufacturing, exporting, and other sectors. On June 11, the Census Bureau held an Innovation Day event to highlight the latest tools and techniques being used to do its work more efficiently and for less money.

If you rely on government information for your marketing or are just curious to know how the economy is doing, you’ll want to learn about developments at the Bureau. Some of the innovations already implemented or underway include:

• Collaboration tools for Census Bureau teams.
• Data collection using mobile devices (expected in the future).
• Deployment of mobile apps to enable immediate access to statistical information. The Economic Statistics app is expected to be released this August.
• New data products, such as the Local Employment Dynamics program, which provides local information about businesses and the characteristics of the employees working in those businesses.
• The use of crowd sourcing to update electronic map files.

Business reporting
Be sure to comply with required reporting to the Census Bureau. Based on the NAICS code, some businesses must report monthly, quarterly, or annually; others report every four or five years. The data typically covers your gross receipts, employment information, and expenditures.

The data you report is confidential; they are exempt from the Freedom of Information Act so your competitors won’t be able to access your company’s reported information. Failure to file a required survey can result in penalties.

Check your reporting requirements at the Bureau’s Business Help Site.

June 6th was the 68th anniversary of D-Day, the Allied landing at Normandy which turned the tide of World War II. Operation Overlord, the code name for the Allied invasion of Europe, was lead by Gen. Dwight D. Eisenhower and involved 160,000 Allied troops, along with more than 5,000 ships and 13,000 aircraft. The operation, which proved to be successful, holds great lessons for business owners today.

Think of Gen. Eisenhower as the CEO of a large corporation involving 160,000 employees. His generals were his managers. He had the vision for victory, and set the tone for the operation, telling his troops:

“I have full confidence in your courage, devotion to duty and skill in battle.”

Gen. Eisenhower demonstrated a number of leadership lessons that business owners can employ today. In Col. Leonard Kloeber, Jr.’s book, Victory Principles: Leadership Lessons from D-Day, seven principles are listed:

1. Vision
2. Innovation and learning
3. Capabilities: people and resource
4. Timing decisions: AIME decision model (Access the situation; Implement a simple plan; Make it happen; Evaluate the situation)
5. Operating principles and values
6. Resilience
7. Your team and team building

While your business doesn’t put lives at stake, like Eisenhower had to do, you do have economic lives at risk. The success or failure of your business decisions and conduct will impact your staff, your customers, your vendors, and even your community.

Thinking like a general, making tough decisions in light of your vision and your resources, and relying on a team that you build are great lessons from D-Day for today.