Pulse Check Kansas City small businesses face economic uncertainty, as well as opportunity.
By Maria Meyers
Unemployment is creeping up, the costs of gas and food are rising, the housing market is in a quagmire, and because of it, banks are tightening their purse strings. While some small businesses may not be ready to drop the “R-word” yet, we can at least agree that we are chest deep in economic uncertainty. But exactly how worried are Kansas City’s small businesses about an economic slump, or even a possible recession? And what are they—or should they—be doing about it?
Be Flexible and Plan First of all, said Denise Fields, technology development and commercialization specialist for the Small Business and Technology Center (SBTDC) at the University of Missouri-Kansas City, don’t panic, but be cautious and flexible. “Small businesses can be more flexible,” Fields said, partly because they don’t have the massive overhead of large corporations and can tailor their strategies to deftly address economic fluctuations. But that doesn’t mean economic downturns don’t cause risk for small businesses, and sometimes pain. But make no mistake, flexibility doesn’t mean being a victim to market whims. Flexibility should be exercised within a larger plan. Small businesses can mitigate the pain of economic cycles by having a long-term plan. Seasonal or yearly, small businesses should think in large arcs rather than solely react in fits and spurts. Joe Lieberman, president and founder of SPIDERtel, a Web solutions company, agrees. “There’s nothing I can do today,” he said. Rather, SPIDERtel works off of a long-term strategy that keeps the company competitive by keeping it completely diversified.
Diversify Customers and Services For SPIDERtel, that starts with a diversified client base. “We don’t want any one client to have more than 10 percent impact on our revenues,” Lieberman explains. “And we don’t want any three clients to have more than 15 percent impact. And we live by that.” That diversity has kept SPIDERtel insulated from any hints of economic slowdown, at least for now. But Lieberman also gives credit to Kansas City’s economic landscape. With major players across a variety of industries, including finance, health care, technology and trucking, “Kansas City is so well-diversified that there is a very robust, resilient economy,” Lieberman said. “Kansas City has a kind of dampening effect.” Like Lieberman, Amanda Mindham, president and CEO of J&A Traffic Products, a distributor of traffic safety supplies, works to keep a diverse client pool, across government and private contractors. But Mindham’s reach into her client base goes beyond measuring impact. “You have to know your customers,” she said. Working off the adage that it’s easier to keep a customer than to find a new one, Mindham is diligent about communicating with her customers, tailoring and even expanding her services to reach deeper into her client base. “Diversifying product lines helps you respond to the market based on the existing conditions,” said Lieberman. Diversity, not just of clients but also of services, is key to survival. And it can even create new opportunities.
Know Your Vendors But Mindham’s eye is also on her vendors, and how economic shifts affect them and the supply chain she relies on. Outside of gas prices and the projects they could delay, her big concern is the price of steel. “We have to keep up with our vendors and their markets,” she said, “both to monitor costs and production timelines.” While Lieberman and Mindham anticipate a possible economic downturn, Barbara Graham is already feeling the pinch. Graham is president of Gifts Etcetera, a retail business located in the urban core that specializes in gifts and party supplies. “It’s a difficult time right now,” said Graham. “During an economic downturn, people tend to spend their money on the basic services—their basic needs. So a shop like this, where you’re spending discretionary funds, has a more difficult time.”
Be Creative In line with Lieberman and Mindham, Graham is exploring ways to expand her customer base and her services. “We need to attract a broader clientele,” Graham said. Gifts Etcetera plans to launch online shopping in the near future, but Graham said they also need to increase traffic into the store. But like so many small businesses, Graham doesn’t have a big budget or a big staff to help her map a plan. So she relies on the powers of creative, targeted marketing—and the ingenuity of her employees. Graham said her employees bring in fresh marketing ideas, and she encourages them to brainstorm and use their personal networks to attract new customers. “They really help me get the word out that we’re here,” she said.
Be Proactive Whether your model is business-to-business or business-to-consumer, and whether your industry is technology, government contracting, retail or something else, the lesson is the same: You have to be proactive. “You have to take your head out of the day-to-day operations,” said Malinda Bryan-Smith, interim regional director of the Kansas Small Business Development Center at Johnson County Community College. Through business courses and counseling, the center helps small businesses gain that crucial perspective to help them diversify, delegate, strategize and adapt. “It’s so easy for business owners to put their heads down, work and not really think about where they’re headed,” said Bryan-Smith. “Take a step back and look at all the processes and what can be improved, what can be tightened up and what can be changed—because change will happen. You just need to be ready to do what needs to be done.”
Maria Meyers, network builder, leads the KCSourceLink and U.S.SourceLink team. Founders of KCSourceLink, a program of the Institute for Entrepreneurship and Innovation at University of Missouri-Kansas City, are the Ewing Marion Kauffman Foundation, the Henry W. Bloch School of Business and Public Administration at UMKC and the U.S. Small Business Administration. KCSourceLink connects small business owners to a network of more than 140 business-building resource organizations in the Kansas City region. KCSourceLink’s services are provided at no charge. For more information, visit www.kcsourcelink.com, call (816) 235-6500 or (866) 870-6500 or send e-mail to
