Now usually I'm all about optimism when it comes to economic recovery and its effect on small businesses, but this time I'm advocating caution. A smart businessman or businesswoman will never make a business decision on how to run their small business without first considering everything and acting with a degree of caution. In a small business setting you don't have the capability to recover from a major slip up, because you don't have that large safety net that larger corporations have. That safety net doesn't even protect them as can be seen with the recent examples of Netflix and Bank of America recording massive losses with programs that were intended to generate additional revenue.
I recently found a list on the Wall Street Journal which details the positives of the economy, but also details pitfalls that may happen to small business owners if they are not very careful. This list can be found here. Most of the issues that are discussed in the article are issues I have already addressed in previous blog articles but there was a new one I have seen which could be a potential pitfall for owners.
With the economy recovering the owners of small businesses have been cutting back on the discounts that hurt their bottom line the year before when purse strings were tighter. This has lead to a slight rise in the price of the goods they are selling which, while not significant yet, may scare away potential or existing customers. The owners must be careful not to alienate their customers as the secret to small businesses are sustainable consistent customers, so the owners must be very careful about which products they price higher.
Without a large customer base like a larger company has, the small business must be willing to make sacrifices in the short term to ensure the long-term survivability of the business.
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