FORGE in the News

Washington Post Business - 08/27/2012

Rough economy hits small business owners’ retirement dreams hard

By Susan Waldman

Recent reports of small business owners planning to never retire are confirmation of what I’ve been seeing from many friends and clients — small businesses have been hit hard by the economy and their owners don’t see a rebound in sight.

In the decades leading up to this century, starting a small business was one of those great American dreams that promised the whole package.  Hope of success, fulfillment, contribution to your community and wealth were all possible for those strong and brave enough to chart their own path.  People starting businesses could expect the hours to be long and grueling, the responsibility to be, at times, daunting, and the stress to be a heavy, ever-present load to carry.

However, at the end of that road there was the promise of success, of dreams coming true and fortunes being made. It was always a vulnerable journey. Many would not make it, but, for those who did, the journey would be very rewarding. And if your small business dreams didn’t come true, there were plenty of other opportunities available in a boon economy or even a stable one.

That was then. This is now. So many small businesses were bludgeoned by the economic crisis of the past several years. With spending down, so were revenues.  With loans drying up, plans for sometimes necessary expansion became impossible. Small business owners found themselves working twice as hard for the same or smaller returns.

Everybody finds themselves in the cycle of working harder for equal pay these days, but it is even more complicated for small business owners. Most corporate jobs come with benefits, but most small business owners don’t have these luxuries.

While health insurance costs for large companies are high, their volume discounting model makes them even higher for small businesses. Retirement accounts, some with matching funds, are common for large businesses. Many small business owners have no retirement accounts at all.

Today’s small business owners are facing a combination of crippling factors that include the need to make up lost revenue from the past few years; delayed expansion plans that devoured growth plans; a highly competitive marketplace where slashing prices has become a tactic of survival for many; a stalled economy; ever-increasing costs of health care; for many, large health-care bills incurred when insurance had to be dropped; diminishing or disappearing retirement accounts turned into cash flow; and a more complex and cluttered marketing environment through which they need to fight for consumer attention.

What we end up with is a vulnerable population, who was once the entrepreneurial spirit that helped this country to be great, and has now become even more vulnerable.  Last month’s Wells Fargo/Gallup small business index showed decline in optimism, and with that a decline in retirement plans.

Being a hearty and generally positive bunch, small business owners would not see this side of the situation alone as reason to believe retirement is impossible.

But adding this to the prospect of an economic recovery that is, at best, expected to be slow, is enough to dim the hopes of the most optimistic entrepreneur that their dream may end differently from what they once planned.

Susan Waldman is co-founder and vice president of strategic services for ZilYen, a marketing firm based in Washington. By Susan Waldman  |  10:59 AM ET, 08/27/2012