Inside the Channel

Small businesses feeling the pinch

The biggest corporations that are suffering are getting the attention of both the media and the government. Big bank? Have a bailout. Car company? Here's some money to get you through. Virtually any big manufacturer that's threatening layoffs has a Congressman lobbying for a piece of the stimulus pie.

But what about the little guy? And by "little guy", I don't mean the peculiar definition of "small business" as any company with fewer than 100 employees. Actually the definition of "small business" has gotten fuzzy, and the government and Small Business Administration even has a very large chart to determine who gets to be called a "small business". In some categories, a company can have 500 employees and still be a small business. A cigarette manufacturer can have 1,000 employees and still be a small business. Who comes up with these definitions? It's nothing but lobbying and special interest groups, lobbying to make sure that they can still get in on small business preferences, even though by any normal person's definition, they're nowhere near small.

I'm talking about mom 'n pop. I'm talking about the local VAR operation with ten employees, and the truly small businesses they serve. These types of small businesses are falling left and right in today's recession, and nobody's proposing any bailouts for them--even though they actually employ, taken together, a large percentage of the population. They stay under the radar.

According to the recent Channel Insider 2009 Market Pulse Survey, solution providers have been reporting their biggest declines in IT spending among SMB clients. And while the news is full of sympathy for the auto manufacturing business, it's smaller businesses that are really hurting. Not that we shouldn't have some sympathy for the auto companies, but let's put it into perspective. In the big picture, they are one segment of the economy that's getting a disproportionate amount of government handouts relative to other segments that are also suffering.

So what does this mean for small businesses that are more or less on their own? According to the report, which surveyed 180 solution providers, SMB customers are hanging onto older equipment longer than they used to, and considering making repairs rather than buying new when something breaks down. When things are tight, you don't want to buy new technology unless you have to. Case in point, I'm a one-man shop. Two, if you count my wife. My printer doesn't feed any more, and I have to stand over it and hand-feed paper into it one sheet at a time when I'm printing. I'll get around to buying a new one, but not today, and probably not this month.

According to the survey, small business customers want more for their money, and they want to make sure that they're able to get the most use out of every piece of equipment they have. A disturbing trend is that 24.4 percent of respondents report that many of their clients are cancelling existing contracts, and several are delaying them. For solution providers, what these results mean is that the focus on delivering ROI is even more important in the presentation--the "cool technology" aspect now takes second place to how much money it's actually going to save the client.

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