Take a Leap of Faith to Stay Ahead of the Pack

The global financial crisis has been a boon to economists who are fond of coining new terms and resorting to colloquialisms to explain what everyone already knows: Hard times are still upon us, and the slow pace of the economic recovery is excruciating. The financial news media has also shown a penchant for using these terms, and thus we get to hear about “green shoots,” “mustard seeds” and a “Goldilocks Recovery.”

Some great literary analogies have emerged as well, such as comparing the economy to a bad marriage and envisioning recovery as “a distant ship in the harbor.” Resorting to such euphemistic language does nothing for the many business owners who have been deeply affected by the sluggish economic pace imposed by the current bust cycle.

The Dangers of Apathy

A lack of spirit has been the most acerbic aspect of the struggling American economy. Business apathy was first detected shortly after the financial landslide, precipitated by the fall of disgraced investment banking firm Lehman Brothers in 2008. While the assets of failed banks were being seized by government regulators, the economy contracted and investors rushed for the exit door.

Corporate America concluded that the best way to weather the economic storm was to drastically cut down on overhead expenses by slashing payrolls and reducing operational scope. Banks took a harsher approach by sharply trimming down on their lending initiatives. While this approach to conducting business can be labeled as careful and measured, it is ultimately apathetic and dangerous since it further impedes economic recovery.

The overcautious approach exhibited by business leaders has done little to advance economic recovery. Some banks have chosen to profit from sitting on piles of cash and exhorting fees from account holders, adopting tight credit and lending guidelines that have done little to advance the economy. As a result of this apathy, many business owners have opted to shelve expansion plans and conserve capital.

Staying Ahead of the Pack

Investors who exit the market, and business owners who downsize and wait for the proverbial green shoots to grow into giant beanstalks, tend to miss out on great opportunities. Industry leaders such as General Electric and Microsoft were founded during recessions, and Internet giant Google has expanded the most since the early days of the credit crunch. There are just a few business opportunities to explore during tough economic times, and expansion is one of them.

The main argument in favor of expanding in a difficult economy is that successful expansion attempts help companies stay ahead of the pack and gain a valuable edge. This in turn enables business owners to maximize their profits when the good times eventually return.

Taking a Leap of Faith

Business confidence is the antithesis to business apathy. Business owners who think they have a winning strategy in their hands should take action instead of following the herd instinct of waiting out the storm. Losing hope is akin to losing money in the long run.

Small business owners who decide on taking a leap of faith and expanding their business should not feel forced to throw caution into the wind and reach into their capital reserves to fund their plans. The Small Business Administration offers programs such as the SBA (7) loan that are perfect for providing cash flow and funds for expansion. Instead of tapping into hard-earned and precious capital reserves, forward-thinking business owners should apply for SBA loans. SBA underwriters are more likely to issue guarantees to applicants who have adequate reserves—especially if those plans include putting a few unemployed people to work.

The business-lending environment isn’t as dire as defeatists like to indicate. The current administration has signed into law a variety of initiatives and tax cuts favorable to small business owners, and the SBA is reporting record numbers of approvals. For small-to-medium business owners who wish to grow, the time to act is now.

As a small business consultant, Tom Blanchard researches new ways to market on the web, and even recommends social couponing for business marketing. Online coupon sites, such as couponcroc.co.uk, can mean discounts for everything from electronics purchases to travel deals.