Small business is still struggling

f, rren I pusr-tsHeo my February column ("What Is Your New Growth Strategy for .C1,20 l3?"), I received calls from a number of friends and readers in the industry saying that although things were better for sure, they did not entirely share my optimism of how strong things are. I understand those comments with a few caveats.

As I wrote this column, the stock market hit a new record at 14,253 compared to 14,164 on Oct. 9, 2007. Yes, it took five-and-a-half years to get back to this point and a lot of pain along the way! Of course, it is possible that by the time you read this, it may have dropped l}Vo.Btt I think, with some twists and turns, we are heading for some good times.

The truth is that we caused much of the pain of the last several years by panicking in 2008. That panic caused the market to drop in three months to a low of 6,547. For those who panicked and sold off everything, the toll has been heavy. For those of us who didn't, the cost has been a lot more bearable. More importantly, among those who got out, many stayed out and now find it difficult to get back in. Unfortunately, come the next down market, many who got back in will sell off all over again. Panic causes everything around us to crumble.

But the sun is rising again. On our side of the economy, the facts are clear. Our industry driver-housing starts-was nicely up in2012 vs.20ll.In 2013, starts (sin, gle and multifamily) are expected to be 960,000 compared to 780000 in 2ol2-a 237o increase. So the question is, who is getting the business and, if you are not seeing it, why not? Some of the industry heavyweights are enjoying great results right now, but I think the turnaround is more slowly impacting the smaller of us.

While the big corporations are starting to rake in high profits (and why not?), many small companies are still not enjoying the same success. Better results are on the way, as the housing market comes to life with home prices rising, the number of underwater homes is falling, and foreclosures are down. Yet, many small companies continue painting a picture of stagnant sales. Might uncertainty be the key factor preventing them from participating in this turnaround? So I stand by my February column: what is your growth plan?

Small business typically leads the way out of recession, but that is certainly not what has happened with this economy. And I can see why! Most small companies do not have the reserves and financial cushion that larger companies have had through the recession, so making a decision to start investing again and employing more people is a VERY tough decision. In the U.S. since February 2010, at companies with 1,000 or more workers, the number of employees has grown by more thanSVo, according to ADP. But for firms of less than 20, the same number is 3.4Vo

No doubt all of us small business owners have had anxiety of how the new medical plans will impact us in2Ol4. The payroll tax increase in January did not help matters, and the sequestration brought us hiccups and a wait-and-see attitude. Government threats for even higher taxes continue to make us reluctant to invest. But as the confidence index starts to increase, we have to have a plan to grow again, lest our businesses further decline as we get beat out by the big boys. They are not standing still.

In our industry, we need to start seeing some of the shuttered mills being reopened, shifts being added, trucks getting back on the road, and people heading back into the field. We need to see new product innovation. We need to see investments in trainins and marketing (naturally). Granted, small business is finding credit tight as banks large and small, who are with us in good and bad times (yes, I jest), are still missing in action.

However, the reality is that although for most of us time has stood still for the last five years, it is now time to wake up or be left behind. Good selling!

Alan

Oakes, Publisher ajoakes@aol.com

www.building-products.com

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