Record Unemployment Hits Small Businesses

posted by   Ian Wyatt   |    November 10, 2008

Posted in   Economy   |   Comments

The U.S. economy continues to show signs of prolonged weakness with a report last week from the U.S. Labor Department that 240,000 jobs were lost during the month of October, bringing unemployment to a 14-year high of 6.5%. The negative report for October follows worse than expected job losses of 284,000 in September (versus an estimate of 159,000).

Small businesses have long been considered a driving force in the creation of new jobs fueling economic growth. However, along with the thousands of jobs being eliminated at major corporations throughout the country, small businesses are also holding back on new hires and looking for positions to be eliminated.

Small businesses such as my company, Business Financial Publishing, haven't been immune to the suffering economy. Many small businesses, while entrepreneurial and high growth during the good times, have had to cut back as a result of the economic slowdown and collapse of the financial markets. Unfortunately, many small businesses have been impacted by reduced spending and tightening budgets at larger companies. While we may not be directly impacted by the tightening credit markets, our customers are. And the consequence of this is less spending on all things ranging from R&D to advertising and marketing.

In a 2008 survey of companies included in the Inc. 500 by Inc. Magazine, all of the companies indicated that they planned on increasing their employee headcount in the next year. I suspect like us, many of these great growth companies have put the brakes on their growth plans.

While we included ourselves among those Inc. 500 companies that had ambitious growth plans for 2008, we are now in the unfortunate position of being forced to eliminate three full time positions in the last few weeks in an attempt to reduce our costs and bring expenses in line with our declining revenues. While these decisions have been difficult, our need to sustain a healthy business have forced us to proactively confront issues related to our cost structure.

I'm hopeful that 2009 will bring renewed interest and recovery for the financial markets. 2008 has proven a more challenging year than expected, but I'm confident that we have a great team in place to help get us back on the path of growth and prosperity.

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