It’s time to reflect on the past year as the clock ticks down to 2010. What I’m finding, though, is that 2009 was a suck year for entrepreneurs. Here are five reasons why:
- Credit Crunch — When the financial and banking industries tanked big time, one of the first casualties was the availability of credit. Consumers saw this when their credit limits were cut, loan rates shot up, and lines of credit were reduced or cut off. For entrepreneurs, the unavailability of credit meant that expansion couldn’t happen. It meant that, in many cases, job creation couldn’t happen. It meant that their customers were less able to make big purchases. It meant their suppliers demanded more timely payments, or started charging for things they used to provide for free (i.e., shipping). Like the trickle-down effect seen when a small-town factory closes, the credit squeeze impacted all entrepreneurs directly or indirectly.
- Labor Glut — Record high U.S. unemployment flooded the labor market with skilled and unskilled workers alike, all scrambling to find jobs or any kind of income to put food on the table. For entrepreneurs, that meant competition and not in a good way. Folks in survival mode have no real long-term plan, little business overhead, and a driving ambition to not end up homeless. They can be driven by months of fruitless job-searching to offer their skills (and, in some cases, their semi-skills) for way below market value on a contract basis, which for entrepreneurs meant less business. In some industries like Internet Marketing, this influx of “help” led to businesses getting sub-par skills and will probably sour them on the industry going forward, making our jobs that much harder.
- Attention Deficits — Getting the attention of consumers became increasingly difficult over this past year. Between social media, traditional media, and fools it’s gotten much harder to get people’s attention.Michael Jackson dominated Twitter and Facebook for weeks, and balloon boy and the White House dinner crashers dominated the traditional media. In all this noise, how was a hard-working entrepreneur supposed to get heard? Hello?!?
- Bigger Government — If history has taught us anything, it’s that when the government decides to “help” business it usually means more regulations are coming. Mismanaged energy policies, bailouts/oversight of selected industries, and looming health care reform all had a devastating impact on productivity as entrepreneurs struggled to figure out how to operate in the new legislative landscape. New taxes, new fees, and other legally-required expenses all put further pressure on the entrepreneur’s cash flow. Now, I’m not advocating a completely laissez-faire approach – I recognize that some degree of regulation is required to keep industries from running amok. Still, there seems little interest in a balanced approach when Congress takes a “bigger is better” philosophy.
- Consumer Bankruptcies — This year over 1.2 million consumers filed for bankruptcy protection. In many cases, consumer debts were thrown out that resulted in entrepreneurs not getting paid for goods or services they provided. That’s not good for your bottom line. Plus, even the spectre of tough financial situations that might lead to bankruptcy had consumers spooked into not spending like we’d hope they would. All in all, it was a challenging revenue mess for entrepreneurs – harder to make sales, and harder to collect on them.
I’m glad this year (and decade) are over for other reasons, and am looking forward to a better decade to come. Or, perhaps, I’m looking forward to making the coming decade better. Yeah, I like that one better.