As an extended recession hangover weighs on both smaller businesses and their customers, searching for the money they are owed has turned into a challenge for a growing number of companies. At issue is customers not making payments promptly – or at all, according to a survey released today by the Kauffman Foundation, a Kansas City, Mo., research organization centered on entrepreneurship.
In 2008, only 2% of small enterprises said getting paid was their most challenging problem. That figure jumped to 12.8% in ’09 2009 and continued to edge up slightly to 14.1% this year 2010, the newest year the info is available.
To be certain, getting paid is always a problem for business owners. However the longer the a down economy drag on, the more thinly stretched companies and their customers become, and the more dire the necessity to receives a commission becomes.
Most Retailers Saving Big on Debit Card Processing Fees
“In early stages everyone is concerned about finding clients,” says E.J. Reedy, a study fellow at the Kauffman Foundation and 1 of 2 authors of the analysis. “The longer that the fiscal conditions are a tiny bit more unstable, the more it boils down to getting cash, and getting payed for everything you have actually done.”
While it’s hard to determine how much of the resistance is via whom, the strain is via both sides of the transaction. “The clients are simply unable or unwilling to pay regularly,” says Reedy. And, regardless of the report being predicated on data from a year or two ago, he says the existing economic environment suggests “that is still apt to be very applicable in today’s environment."
The report also notes that getting customers in the entranceway continues to be the very best overall concern facing businesses, although the outlook appears to be improving slightly for a few. Slow or lost sales was ranked as the largest problem by 43.8% of companies this year 2010, down from 53% in 2008.
SMALL COMPANY Hiring Slows, BUT NONETHELESS Adding More Jobs Than Large Companies
Meanwhile, credit conditions for smaller businesses are still rough, however the inability to acquire credit ranked pretty lower in the set of top concerns in the Kauffman study. Only 4.4 percent of firms said usage of credit was their most challenging problem this year 2010. And significantly less than one percent of companies cited the price and terms of this credit as the largest roadblock.
That’s because usage of credit is a high priority limited to businesses that want to grow and expand, and the firms in this survey are “adolescent” or mid-range companies, says Reedy, not the high-growth group. This year 2010, only 11.1% of the surveyed companies even requested a new mortgage or credit line.
The Kauffman Foundation’s Firm Survey, released annually, has been tracking the same 4,928 firms given that they launched in 2004, including new businesses, purchasing of franchises, and the purchases of existing businesses by a fresh management team. The recession has been brutal to the nascent startups: by the end of 2010, only 49 percent were still running a business.
These small, young firms are “swimming upstream, flying into quite strong headwinds,” says Reedy, of the fiscal conditions business owners are fighting. “Young businesses are between the most vulnerable businesses.”
Readers, have you got any methods to enforce that customers pay you promptly?
Green Power: A Low-Cost Boost to Your Brand and IMPORTANT THING