So the NBER says it's official: we're in a recession, and have been for a year. The other week I posted about how some types of small businesses do worse in recessions than others. But do any do better?
Luckily we have researchers like Scott Shane of Case Western Reserve to examine that question. Based on data regarding what businesses grew in the last major recession in the early 90s, Shane identifies four industries:
- Banking, such as mortgage loan brokers, financial transactions processing, commodity contracts dealers
- Accident and health insurance
- Offices of health practitioners (like speech therapists)
- Business consulting
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No matter how bad the global economy gets, there are always some people who have it worse:
Three small business owners took their own lives over the last two weeks, apparently because of the economic slump.
An owner of a marginal sewing business in Busan was found dead in the basement of a factory, Friday, in an apparent suicide. Police said he hung himself and left a note saying, ``I’m sorry that I cannot pay wages to my workers.’’ The 56-year-old man, identified only as Kim, has not been able to pay wages to five employees due to plunging orders over the last two months, according to the police.....
....On the same day, another small business owner was found dead by his elder sister in his room in Busan. The 51-year-old man took a poisonous substance and left a note in which he said he was sorry for poor business.
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Fortune's profile on the changes to economic policy that the Obama administration will be making has several interesting tidbits. One of them is the suggestion that Obama could shift away from policies that bail out big businesses and policies that encourage or allow them to consolidate--as in the case of J.P. Morgan and WaMu, Wells Fargo and Wachovia, etc:
Obama will bring to the White House a view endorsed by some of his advisors that bigness itself is a source of risk. It was a Republican administration that imposed a policy of "too big to fail" for the rescue of banks and insurance giants, and for loans to the auto industry. As a candidate, Obama issued cautious support for the Bush administration's bailout of AIG (AIG, Fortune 500), the world's biggest insurance firm. Any future decisions on corporate bailouts - including ailing automakers - would be determined by how "interconnected you are to the rest of the economy, both here and abroad," said Bernstein.
But some Obama advisors argue that the government should use its antitrust stick to prevent the formation of big business in the first place. "Pardon me for asking," Obama advisor and former Clinton Labor Secretary Robert Reich wrote on his blog last month, "but if a company is too big to fail, maybe - just maybe - it's too big, period."
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I was reading Inc's fascinating article about Harmonix, the developer of the first two Guitar Hero games and the current smash Rock Band games. It's a terriffic read--Harmonix went from being a company that hadn't made a dime in almost a decade, to being one of the most successful video-game developers ever.
But one portion I think is quite revealing in terms of just what we have to lose from this current economic crisis. This excerpt describes what Charles Huang, founder of Red Octane, the former partner of Harmonix and designer of the little plastic guitars that launched a million fingers, had do to keep Guitar Hero alive:
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Sarah Scrafford at WebPreneur Blog has a handy list of the 20 most useful iPhone apps for entrepreneurs. Most of these would be useful for anybody dealing with a busy work life. Let me highlight the apps that would be most useful for entrepreneurs specifically:
iBillTo: Financial transactions take place whether you’re in the office or not, so it’s important that you have a way to enter them from anywhere you happen to be. Using iBillTo, you’ll be able to keep track of client billing information, so it’s all available to you whenever and wherever you need it.
Attendance Countdown: Don’t let your working hours get away from you. Use this app to count exactly how many hours you’ve spent working, and count down how many you have left available.
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Almost everyone is expecting the unemployment rate to only increase. Small businesses are certainly going to be hit by those job losses. The most recent NFIB survey said that in the month of October, small business employment fell by eight percent, and it went down ten percent the month before that. Laying off employees is an obvious way to save money during a recession.
But could it actually be costlier in the long-run to lay off an employee?
This New York Time article from yesterday gives some reasons to think so:
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When US News published my list of five Most Overrated Small Businesses, I knew I was getting into controversial territory. Restaurant associations are not pleased with the number of people who call the restaurant industry a bad area of business for the small-business owner.
They have some good points. Claims about the failure rate for restaurants are often grossly overstated. It's not around ninety percent, but around two-thirds for restaurants in their first few years. Still high, but not much higher than for your average small business.
But it's still a difficult business, as almost anyone involved in it will tell you. And in today's economy, it's only getting more difficult.
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