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2007
has been a murky year economically, and that haziness will only linger
into 2008, economists say. The housing slump, higher prices for
essentials, (like gasoline), and layoffs are making consumers nervous,
which, in turn, is causing a drop in revenue for small business. It’s
uncertain how deep the drop will be or how long it will last, and the
recent run-up in oil prices to record levels will undoubtedly slow
business and consumer spending, which only adds to the difficulty in
predicting how (or when) the tide will shift. According to a poll of 53
economists taken by USA Today, there is a 30 percent chance of the
economy sinking into a recession in 2008. The aforementioned housing
slump and higher interest rates for those with adjustable-rate
mortgages may mean customers will be unlikely to seek home-equity lines
of credit, giving them less money for discretionary spending.
High energy costs are another factor contributing to the current
economic instability. The high costs are forcing the public to spend
more filling up their cars and heating their homes, once again leaving
less in the budget for nonessential spending. The U.S. average gas
price is approximately 62 cents higher than in 2006. The Energy
Department has warned that, as winter approaches, heating costs could
hit all-time highs.
This all adds up to tight-fisted small business owners. The uncertainty
in the marketplace means that as the populace spends less, businesses
are also spending less. Also, like the general public, business owners
are spending more on essentials, putting a strain on their bottom
lines. Diesel fuel for shipping trucks has risen 57 cents from a year
ago, and companies are being charged higher delivery costs — which
oftentimes get passed on to customers. It’s an unfortunate reality, but
reality notwithstanding, business owners shouldn’t let fear stop them
from doing what they have to do. No one wins if a business can’t earn a
profit, so have a clear idea of what your break-even point is and base
your fees on what the benefits and results of using your product or
service are worth to your customer. Fear of losing customers is
expected, but if you can solve their problem, and if it is important
enough to solve, then they shouldn’t mind paying the appropriate cost
for the solution.
–todd williams
