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Concerns Among Small Businesses, According To Two Companies That Serve 'Em

Posted by Gayle Kesten Friday, Jun 12, 2009, 11:48 AM ET

Does it make sense to take out a business loan if you're struggling to attract customers?

Some would say that money could help fund new-business development -- pay for the salary of a few extra salespeople or boost marketing, for example -- and that's absolutely true. But that's not what Ken Yancey has observed. "Many small businesses I've spoken with have said, 'Well, without more customers, if my business doesn't grow, getting another loan would be hazardous for me because I can't repay it,'" said the CEO of SCORE, a nonprofit comprised of thousands of mostly retired businessmen and women, who volunteer their time to counsel others who are starting or trying to grow their own businesses. "They're not looking for new loans or new debt."

Yancey had my ear to talk about SCORE's recent partnership with PartnerUp, which runs a newly enhanced resource-filled online community for more than 100,000 small business owners and entrepreneurs; PartnerUp co-founder and CEO Steve Nielsen was part of our conversation, too.

If anything makes sense, it's the match between the two companies. "It's a great extension of what we do," Yancey said. "From a SCORE standpoint, not only do we benefit from the platform, but we have the opportunity to interact and serve the small business owners and entrepreneurs already resident and active within the community."

According to Nielsen, PartnerUp is all about "function-wrapped interaction" -- i.e., doing business, period. "On Facebook or LinkedIn, you can keep track of and contact people, but those sites are more for networking, whereas on PartnerUp if you're looking for specific things, the community is right for you," he said. For example, PartnerUp's Properties section can help connect community members to those who know of hard-to-find subleasing opportunities, those who have those spaces, or real estate firms. The Business section offers a place for members to list their businesses. "All of the functionality is tailored around things small business owners and entrepreneurs need to achieve their goals," Nielsen added.

(Sounds tailor-made for those of you who consider social media to be a huge time suck.)

No surprise, Yancey said his SCORE counselors have seen a rise in the number of displaced workers who want to set up their own shops. "They're looking to small business ownership and self employment as a career alternative," he said. "We can lead them through a feasibility study, and help them choose the right vocation or business based on their hobbies, skills, and interests."

SCORE counselors are also having a lot of conversations with their small-business clients about marketing, Yancey said, which mirrors discussions on PartnerUp, especially about online marketing, Nielsen said. "It seems like so many online marketing venues are perceived by them to be way too complex to become involved in," he explained. "There are a lot of discussions around, 'How do I promote my business online? I know people are looking for vendors online, I know it's a great place to reach new customers, and I know if done right it can be an efficient [way to market], but I don't know anything about SEM or PPC.' They're asking, 'What does it all mean?'"

OK, I had to ask: How much would the retired business workforce really know about online topics? Yancey admitted that not all of his volunteers are tech-literate -- "just like those folks who specialize in technology might not be good on cash management, budgeting, finance, or inventory control." (Touché.) That's where team counseling might come into play, "so if the volunteer you're speaking with doesn't have absolute current knowledge on topic that might relate to SEO, for example, he knows exactly where to go to get that information for you."

Three more points from our conversation worth mentioning:

• The overall economic mood among small-business owners: "People on the community may not feel great about what they're seeing, but at same time there's a little bit of a disinterest," Nielsen said. "They maybe make a comment or two, but then put their heads down, get back to work, and figure out how they're going to make money."

• Opting out of the recession: "We've been talking a lot about customer service. Make sure [your customers] know you're still open and active, and that you don't intend to participate in the recession. All are good messages," Yancey advised. "Make sure they understand how you can add value, and then deliver on that promise.

• Strength in numbers: "After finding new customers, I would say the next concern for small businesses is how to optimize their business results," Nielsen said. "In the current economic climate, obviously things are a little tough, so any opportunity you have to reduce your expenses, turn fixed costs into variable costs, and make your business more efficient is of real interest. We're we're seeing lots of discussion on the community from people looking to cut costs, renegotiate agreements or tips on doing so, for ways to share volumes to achieve discounts, and ways to scale more easily."

What do you think: Does it make sense to take out a loan if you're having trouble bringing in customers? What other factors would hold you back from applying?

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