Small busi­nesses grow cau­tious, just in case

The Charlotte Observer (Sunday) - - Business - BY JOYCE M. ROSEN­BERG

The stock mar­ket’s vo­latil­ity this year has some small busi­ness own­ers de­cid­ing to run their busi­nesses cau­tiously.

Con­sumer spend­ing and the econ­omy are strong and many busi­nesses re­port all is well. But some own­ers are wor­ried be­cause their cus­tomers are spend­ing less.

Some own­ers are think­ing of tak­ing fewer risks. One con­cern is that the gy­ra­tions are a har­bin­ger of re­ces­sion; in­vestors tend to buy and sell based on what they think the econ­omy will do in six to nine months. And while the mar­ket has been right be­fore – as in mid-2007, when it be­gan fall­ing half a year be­fore the Great Re­ces­sion be­gan – it’s not fool­proof. Ch­ester Spatt, a fi­nance pro­fes­sor at Carnegie Mel­lon Univer­sity’s Tep­per School of Busi­ness, notes that when the mar­ket crashed in Oc­to­ber 1987, “that fall was not re­ally as­so­ci­ated with a ma­te­rial change in busi­ness.”

Still, when there’s vo­latil­ity, “busi­nesses may re­act, for ex­am­ple by re­duc­ing their or­ders in ad­vance,” Spatt says.

What some own­ers are do­ing:

● Cost-cut­ting is be­com­ing a pri­or­ity.

● The Slum­ber Yard, which op­er­ates prod­uct re­view web­sites, will hire more slowly next year, co-owner Jeff Rizzo says.

● Prospect­ing for busi­ness, some­thing many own­ers do con­tin­u­ally, is be­com­ing more im­por­tant.

● En­trepreneurs hav­ing a harder time get­ting in­vestor money are putting Plan B to­gether. When it looked like Steve and Bea Fisher wouldn’t get in­vestors for a hard­ware store in a ru­ral part of Ne­vada, the cou­ple looked at their sav­ings and be­gan in­quir­ing about non-tra­di­tional lenders. But they found that lenders of­fered only small amounts, some­times $2,000 out of $10,000. “We thought we might be forced to dig a lit­tle bit deeper into our pock­ets,” Steve Fisher says.

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