business

Contrary to the caliphony of competing messages coming from Wall Street and the Capitol rotunda, most of us business folk don’t lie awake at night worrying about taxes or regulations or whether or not we are going to win the Stimulus lottery.  We worry about three things: finding customers, raising money, and indirectly or directly, we worry about China.

I run a small business (shameless plug: Zebulon Solutions–we help turn R&D projects into manufacturing ready products); most of our customers and prospective customers and vendors and friends also run small to midsized businesses.   While there are times we’ll all sit around and grouse about politics or whinge about our own taxes, these are not the real roadblocks to growing businesses and creating jobs.  Nor are most of us betting on some type of government bailout or stimulus.  We just want more customers; we and our customers need capital; and we fret about China.

Customers are number one. I can’t think of a business that wouldn’t hire more people if they had more customers.  It’s demand that drives supply growth these days.  If businesses see a way to increase demand for their products or services, they’ll hit the Grow button.  And most business are working like crazy to find ways to goose demand (assuming they have the capital to pay for that marketing and sales effort, see below).

Capital is number two.  It’s shocking the number of small businesses that don’t have enough capital to do what they know needs to get done: goose their marketing, perfect their offerings, cost reduce their products, optimize their supply chains, and / or ramp production when demand does perk up.  Personal savings are depleted, home equity and credit cards are tapped out, and banks only lend to those who don’t need it.  And venture capital and even angel investments are in a deep coma save for a few hot niches (social gaming anyone?).

And finally there is the specter of China lurking behind every door in one form or the other.  It’s competition from Chinese companies who do have access to capital and to cheap labor; it’s  competition from domestic competitors who manufacture in China; it’s expectations of customer to only pay the China price.  And this ties back to demand and capital in a weird way, because it actually takes both to be able to go to China: to get China pricing one needs China volumes (demand) and in practice it takes a big investment in terms of bring up a China supply chain and funding all that inventory on the water.

Which should and maybe will eventually stimulate domestic supply chain development, but then the China expectation kicks us in the tush, the expectation of pricing low enough to compete, to win customers, to raise capital. And the easy answer–just wrap a flag around it and buy local–is rarely that easy: we’ve seen business plans implode from overpriced domestic supply chains that stymie demand and poison fund raising efforts. Building a cost competitive domestic supply chain also takes a lot of work, and that takes capital too.

I have no easy answers to this.  But I would like to see the dialog switch away from political issues that don’t matter as much to business issues that really do impact our businesses. Let’s get a national dialog going about building domestic supply chains, about freeing up capital for small and mid sized businesses, about opening up export markets and driving new demand. Let’s get those R&D projects out of the CAD system and into production.  Let’s get those cost reduction ideas off of the white board and into the supply chain.

Back to work,

Chuck