COSBE board says economic recovery has begun

In a new BizTimes survey, members of the Metropolitan Milwaukee Association of Commerce’s (MMAC) Council of Small Business Executives (COSBE) board of directors said they believe that the economy is finally improving.

The leading question for the survey asked, “Do you believe the worst of the Great Recession is behind us?” In an overwhelming response, 89.3 percent of the directors said “yes.”

“I believe that recovery started last April based on what our clients were saying, and has emerged more in the fall and winter months,” said Dave Kliber, chairman of the COSBE board of directors and president, chief executive officer of New Berlin-based S-F Analytical Laboratories Inc.
“The worst is behind us, but we are still seeing the impact into 2010 with unemployment,” said Connie Roethel, president of Core Health Group in Mequon. “I’m optimistic to see recovery but it will be slow until the fourth quarter of this year.”
Most of the COSBE board members predicted increased revenue and profits for their companies in 2010. However, many said they will remain cautious this year.
“I do feel that the worst is done,” said Tina Chang, CEO of Brookfield-based SysLogic Inc. “However, I feel we will experience the aftermath and the trickle down affect as (businesses) closed out 2009 and begin reporting earnings,”
The survey results showed that while the COSBE directors expect increases in both revenue and profit, they have differing expectations as to the amount of growth that will occur (see Figure 1).
Fifty percent of the directors expect up to 5 percent revenue growth, while 29.2 percent expect 5-10 percent growth. The remaining directors, 20.8 percent, are expecting more than 10 percent growth in 2010.
The expected profit increase is similar with more than half of the directors predicting up to 5 percent growth and the others split on higher predictions (see Figure 2).
To reach the profit and revenue increases they are predicting, many COSBE board members said their goals are to focus internally on their workforce, work on succession planning and improve their technology.
“Overall, in 2010, I see both profit and revenue increases as the percentage of sales increases. I think as a result of the recession, most successful businesses are more efficient and we will see revenue increase before we see payroll and staff increase,” said Chris Rebholz, president and chief executive officer of New Berlin-based Christopher Morgan Fulfillment Services.
About 46 percent of the COSBE board members said they will add to their current workforce this year, but 33.3 percent said they would do so by adding temporary help.
“I don’t think we will ever get back to the staffing levels we were at before this recession,” said Rebholz. Noting the recent layoff of 11,000 workers Sam’s Club of Wal Mart Stores Inc., Rebholz predicts that employees, especially in retail, will be replaceable as our society continues to advance technology.
Some business executives are still not confident enough about the economy to plan on hiring more employees.
“I am not at a comfort level yet to allocate to adding workforce or to make significant capital purchases, which for us would be large machines,” said David Griffith, chief executive officer of Muskego-based Cross Towne Machining. “We are focusing on software systems and technologies to continue to improve what we do.”
COSBE board members were split on whether or not they planned to invest in any significant new technology or equipment this year.
Gary Zimmerman, president of Creative Business Interiors Inc. in Milwaukees is currently struggling with a decision to invest in a new $50,000 software system for his business.
“I know in the long run it would pay for itself, but you need to weigh in the question of cash flow,” said Zimmerman. “On the one hand, you know you need to do it. However, it is not essential to the operation of the business, yet it could help the business.”
According to Chang, business at SysLogic Inc. has increased with companies looking for technology solutions that directly benefit their bottom line.
“The work we had in the pipeline as we kicked off 2010 to organizations directly or indirectly funded by government granted technology programs have increased,” she said.
Kliber recently closed a Small Business Administration 7A loan and is currently in the process of purchasing equipment and expanding a department at S-F Analytical Laboratories Inc.
“We have been investing before, during and we continue to do so after the recession,” he said.
Only 46.4 percent of directors said that their organizations had a social media strategy.
“Social media is a part of everyone’s early stage strategic plan. I don’t think businesses will spend heavily in social media in 2010 due to the low cost factor,” said Chang whose organization provides social media services for her clients.


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