Why Startups Get A Free Pass During A Recession: Q&A With Attorney Andrew Sherman
Hesitant to start a new business while the economy is still in the dumps? On the contrary, now might actually be the perfect time to turn your entrepreneurial dreams into reality.
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"I'd rather be cutting my teeth in a slow economy than in a booming one when the stakes are higher," recommends Andrew Sherman, a partner based in the Washington, D.C. offices of law firm Jones Day, and founder of Grow Fast Grow Right, an education and training company. "If you think about the entry cycles of starting a business and figure your first 12 to 18 months are when you have to ramp up anyway, why not ramp up when things are slow? Learn the market, make a few mistakes, and then you'll be more ready when the economy starts rebounding."
Sherman's perspective is well-rounded, to say the least: As a corporate and transactional attorney, he has worked with growing businesses up through the
And that's well-timed advice considering the nasty weather we call the U.S. economy. On the eve of National Small Business Week, bMighty spoke with Sherman about a slight thawing in small-business optimism, lessons the little guys can learn from the
Sherman's perspective is well-rounded, to say the least: As a corporate and transactional attorney, he has worked with growing businesses up through theFortune 500 for years. He has written numerous business books, though his latest, Road Rules: Be The Truck, Not The Squirrel, is more of a how-to for life. That said, plenty of those lessons also apply to growing businesses. "You have to be an all-weather driver," he says. "Being a small business owner means enduring all weather types. You're not going to get all bright, sunny days in the world of business all the time. You have to run your business in rainy, stormy, icy, and cloudy days, as well. The sooner you can accept and embrace it, the sooner you can make it a source of growth and creativity as opposed to it being a pain point."
And that's well-timed advice considering the nasty weather we call the U.S. economy. On the eve of National Small Business Week, bMighty spoke with Sherman about a slight thawing in small-business optimism, lessons the little guys can learn from theFortune 500, and where small businesses should spend their precious marketing dollars.
bMighty: What are the biggest issues facing small businesses?
Andrew Sherman: From a market perspective, and then we'll get to policy, it's that things are frozen and not defrosting fast enough. Frozen in terms of new customer orders, frozen in terms of ability to grow and access resources, frozen in terms of access to credit and the equity markets. It's a time of bootstrapping, and the creative are being rewarded who can work around the ice masses. Those who rely on a steady flow of either new customers or consumer spending or access to credit markets are really suffering right now.
bMighty: When do you foresee the economy improving?
Sherman: It's hard to predict how quickly things will defrost and how much the economic stimulus plans will expedite that defrosting. Still, it's not frozen in a way that people are not doing things. I'm definitely seeing an uptick of people seeing the light at the end of tunnel, people feeling that at least the administration is making all the right moves and trying things. One of the things I said in a speech [in April] to 150 executives is, you have to keep moving in this economy. You can't be a deer in the headlights. Even if you move in the wrong direction -- which you won't know for six to 12 months -- keep moving. Don't stand there and wait to get hit by a truck. Most small business owners will be rewarded for making decisions, even if, as crazy as this sounds, those decisions turn out to be wrong in retrospect.
The other thing that's happening inside a lot of small companies is employee-level fear and uncertainty. The more that small-business owners can do to alleviate that -- without being dishonest -- the better, because if people are sitting at their desks worrying about their jobs, then they're not doing their jobs. And that's having a real impact on productivity.
bMighty: What about policy makers' efforts? Are they making true progress?
Sherman: We've been monitoring the changes in SBIC regulations, TALF regulations, and a lot of the stuff coming out of the Hill and SBA. I think we need more clarity still. People are more confused than they are clear. It's like being in a dark room thinking you're making progress, but you still don't have the clarity you need to get to the other side of the room. A lot of stuff is coming out, and the papers are reporting it, but there are a lot of details left to attach. Every time I think I have a handle on what a policy is going to be, it gets modified, though I think at the end of the day there will be positive news.
bMighty: If you're having a hard time, then that makes me feel better!
Sherman: [Laughs] It's not you.