WisBusiness: Small-business owners advised to look to long-term goals

By Ryan Cardarella

For WisBusiness.com

With stricter banking regulation and an overall economic slowdown, a panel of Milwaukee-area business leaders Tuesday evening advised small-business owners to temper their short-term expectations and to use the present to secure their financial footing and develop long-term goals.

“We are in a trough cycle right now,” Kurt Krumholz, a financial consultant with Suby, Von Haden and Associates. “Businesses need to sort of refocus, figure out where they are and where they want to go, and reduce their expectations at the moment.”

Stating that most of the companies he has dealt with are going to be down 10-20% this year in terms of earnings, Gary Giesemann, a partner with Deloitte Tax LLP, has seen the optimism fade in many small-business owners who had hoped to avoid substantial workforce cuts.

“Layoffs are coming with so many orders and sales dropping across the board,” said Giesemann. “It’s going to be hard for small-business owners to keep their workforce in place.”

On a local level, panelists said more must be done in the private sector in order to stimulate the economy and attract business to the region.

“We aren’t selling Wisconsin well enough,” said moderator and Metropolitan Milwaukee Association of Commerce President Tim Sheehy.

He cited the need to improve the state’s tax climate and employment pool in order to become the type of region that brings in new business.

“We need to be more proactive in making Wisconsin a more attractive business climate,”

The MMAC sponsored the event, which was held at the University Club in downtown Milwaukee.

In spite of the current slowdown, panelists stressed that it is no time for business owners to panic, stating that the climate is not quite as poor as the media portrays. While it is more difficult to secure a loan in the current banking climate, panelists said the idea that small-business owners can no longer secure the loans they need to prosper has been overstated.

“Banks are still lending money, and I think that the press is overplaying the difficulty of getting a loan a bit,” said David Baumgarten, executive vice president of regional banking for Associated Banc-Corp.

“Communication is key because banks just don’t want any surprises,” he added.

An audience member questioned how the recent government bailout of many American financial institutions would affect the business climate both short and long-term, with the panel identifying inflation as an eventual byproduct.

“It’s clearly one of the risks of the bailout, with so much liquidity now in the system,” said Baumgarten. “Inflation is something we will have to deal with down the road.”

Asked to provide advice to small-business owners, Krumholz offered a back-to-basics, conservative approach aimed at riding out this slow economic cycle.

“Take inventory of where you and your company are financially and try to set some parameters to work around,” said Krumholz. “Companies with sound, organized business plans are going to be the ones who will be most successful in this climate.”

The panel also touched on the effect that the tight economic times are having on pension plans, with companies shifting from more definitive pension plans to 401(k) packages, a shift that is presenting some problems for some employees.

“What we have are more uninformed market players that need more 401(k) education and awareness so that they can appropriately manage their earnings,” said Krumholz.

He notes that more Wisconsin residents are now active in the market, and many do not know exactly how to best utilize their current plans.

Giesemann added that too many workers do not know what to do with their plans or where to go for solid financial advice for their plans, something he said that small businesses must address.