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Small Business Owners Shouldn't Fret Over Stocks

Sure, the market sucks. But it'll recover. Meanwhile, keep busy working to improve the way you do business

As I write this column, the stock market has lost almost 50% of its value during the past year. But for most of us small business owners, this loss doesn't matter as much as people may think.

My company sells business software to small and midsize businesses. I see and speak to dozens of business owners and managers each week. Here's what I usually hear when I ask about the stock market: It sucks. But oh well, life goes on. Some people have gotten out of the market altogether. Others are hanging in there. Whatever. We aren't screaming and running naked in the streets (with the exception of the Phillies fans in my neighborhood). Panic is not overtaking us.

And why? Our own companies see ups and downs that are sometimes completely unconnected to the market and the economy. We take these things in stride. We're used to challenges. And we know that in bad times things are never as bad as they seem and in good times things are never as good as they seem. Business—and life—are cyclical. Just ask Don Imus.

Growing Confidence

And there are some encouraging signs. Energy prices have almost dropped in half in the past year, which means that the prices of supplies related to energy (and that means just about everything) have also stabilized. The credit crisis seems to be easing, as the government pumps billions into the system to free up loans. Consumer confidence is up. Britney Spears is thinking about going on tour again. Interest rates are still historically low.

Of course, the market decline is bad. The biggest issue is simple confidence. A rapidly declining bank account motivates businesses and consumers to stop making purchases. And that reverberates throughout the world economy. But those of us who have been there know this: There are a lot of consumers in Britaian, China, India, and here at home who are itching to get back to buying that new electronic-high-definition-gravity-time-travel device being introduced by Apple (AAPL) next year.

Just because management at General Motors (GM), AIG (AIG), and Citigroup (C) haven't done a very good job doesn't mean we don't know what we're doing. Small business owners I know are shrugging off the market decline. We're putting our heads down, squaring our shoulders, and steeling ourselves to navigate through the next 6 to 12 months of slower demand. And what exactly are we doing or should we be doing?

Make sure that overhead is covered. That means first making sure we know what our overhead is and cutting it as much as possible. Then it's hustling, jumping, singing, and dancing to make sure deals are getting done to cover it. Sure, some of the stuff sold, and some of the people buying aren't the ones we'd care to do business with when times are good. But times aren't good. So we do what we need to do to at least make sure that our overhead is covered.

Buy real estate. Because now's a great time. Prices are flat or down just about everywhere you look. The stock market's volatile. But the real estate market, depending on where you buy, is relatively safe. Interest rates are still historically low. And with the credit crisis easing, bankers are happy to loan money to (gasp) people that can actually afford to pay back the loan and with the (double gasp) real assets to back the loan up.

Negotiate better and longer-term leases. Because landlords are squirming. And rents are decreasing. And the real estate market has softened. And some overexpanded electronics firms are going out of business. And other overexpanded linens outlets are filing for bankruptcy. So business owners with a little savvy can negotiate some of the best real estate leases in a long time.

Keep our eyes open for the right human capital. Because for employers, it's a buyer's market. The unemployment rate continues to click up as those poorly managed large companies shed good and smart people. People who may be willing to work for a little less and be given more responsibility and opportunity. Smart business owners know that people are their greatest asset and the cost and availability of these assets has become more favorable.

Invest in our customer databases. We're seeing a big demand for customer relationship management and sales software. Small companies, so busy over these past few years keeping up with orders, now have the time to take a deep breath and reorganize their customer databases. We're using this time to update the data and make sure there are marketing processes in place to keep these customers updated and happy. Oh, and we're investing in sales and service people. Because now that we've seen the value in our customers, we're going to do everything we can to show them how much we care.

Invest in infrastructure. Many of the business owners I'm talking to have bloody noses from the stock market. We're pointing our investments internally. Buying equipment. Fixing up the offices. Installing new racking. Training our people. Improving processes. You get the idea.

We watch as the stock market drops and we shake our heads. But we've seen it before. In 2000 it was techs. After 9/11 it was transportation. Now it's cars and high finance. We sympathize with those that are suffering financially. But we know it's not going to last. We know with every downturn comes the recovery. So when asked about the stock market, we just say, it sucks. And then we get back to work. Because the stock market doesn't matter as much as people think.

Gene Marks, CPA, is the owner of the Marks Group, which sells customer relationship, service, and financial management tools to small and midsize businesses. Marks is the author of four best-selling small business books and writes the popular "Penny Pincher's Almanac" syndicated column. He frequently speaks to business groups on penny-pinching topics. More penny-pinching advice from Marks can be found at

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