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John Burke, Lorelay Corona, Rachel Holfelder, Julia Salem, Angela Van Strander, & Matt Vital

BA 319: Final Presentation

Small Business During

the Recessio

n

+

Overview

From Santa...

•The Dilemma/Issue at Hand•Background Info•Research Planning•Prevention, Survival Tips, etc.•Data Collection & Preparation•Surveys•Analysis & Interpretation• Confidence Intervals• Graphs & Charts• Hypothesis Tests• Regression

•Reporting•Suggestions

+The Dilemma/Issue at Hand(Background Info)

•Researched small businesses and the effects of the recession

•Distribute surveys

•Interpreted the collected data

•Finalized information collected from the surveys and came up with conclusions that will be stated later

+Research Planning:Small Businesses During the

Recession

*Research articles online that were based on small businesses and the recession

*Chose relevant factors about small businesses in the recession

Some articles we read were:

•“Recession and Small Business”

•“Why Most Small Businesses Will Beat the Recession”

•“Small-business owners, hit by recession, seek remedies”

•“Even in Recession, Some Small Businesses Grow”

+ Small Business Statistics

(In General)

Three quarters of small businesses put surviving the recession down to the strength of their own determination and initiative.

Only 23% of respondents felt it had been easy to access external help and advice during the recession.

+What are the Most Profitable Small Businesses in a Recession (in General) Dentists

Accountants

Lawyers

Doctors

Their profit margins range from 11.5% to nearly 17% net profit.

+7 Recession Effectsof the Recession Cycle

1. Consumer Spending Might Go Down.

2. Competition Could Get Fierce.

3. Your Expenses Will Go Up.

4. Your Business Will Become Unpredictable.

5. Interest Rates Might Come Down.

6. You Could Get A Chance To Invest Outside Your Business.

7. Your Employees Could Demand Higher Salaries.

+6 Essential Small Business Recession Survival Questions

1) What are my most profitable activities right now that are likely to remain consistent and keep producing in the current environment?

2) Do these activities produce enough profit to warrant a business to support them?

3) What activities are least profitable that I can no longer afford to do?

4) What are my exact costs each month, and what can I do without?

5) How can I subcontract and hand off all work that does not directly product a profit?

6) How can I leverage my tangible and intangible assets to profit in different ways?

From the Small Business Association by Stuart Burkow

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Data Collection & Preparation

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Distribution of Surveys

Our Survey

+Creating Questions for Our Survey

The opinions we will collect are what impact the recession has had on customer spending for a specific business.

The second opinion we will collect is what techniques are effective in combating the recession.

The last opinion we will collect is which businesses are most likely to strive during a recession.

In regards to our sampling plan, we plan on dispersing within the areas of Wilkes-Barre, Kingston, Moosic, Scranton, and West Pittston to find small and local businesses.

The people who will be surveyed will be employees of these businesses who know the effect of what the recession has done.

Opinions Sampling Plan

+Our Survey Questions

We will use a variety of surveying questions involving some fill-in, ranking answers and picking the best answer that applies.

We plan to survey small businesses in and around the town.

We will survey all types of small businesses that are privately owned. 

We do not wish to include chain businesses into our project.

We will survey all types of businesses such as restaurants, shops, cafés, flower shops, consignment shops, and grocery stores, etc. 

Question Format Target Audience

+Our Survey Questions Demographic/Target Audience

The following questions are asking businesses about the following: What age group describes you? How long have you worked for this company? How long has the company been in business?

Age (circle age group): 15-19 20-29 30-39 40+ 

How long have you worked for this company? Less than 12 months About a year More than ___(insert #) years

How long has the company been in business? ___ year(s) & ___ month(s)

+Behavioral

How businesses have changed their business to attract customers over the last year.

Has the business’ inventory purchasing changed in the last year?

The primary business strategy used for keeping business successful.

The amount sales have increased or decreased in the last year.

The following questions are asking businesses about the following:

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BehavioralQuestions

Click icon to add picture

+Opinions

What impact the recession has had on customer spending for business?

What techniques are effective in combating the recession?

Which businesses are most likely to strive during a recession?

The following questions are asking businesses about the following:

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Opinion Questions

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Analysis & Interpretation

• Confidence Intervals• Graphs & Charts• Hypothesis Tests

• Regression

+Sampling Plan

Small Business

Around CampusMoosicWest Pittston

Stratified Sampling Locations

+Respondents

39 replies PaperHanded out 60 Surveys Method of Distribution

+Confidence Interval What is the proportion (with 90% certainty) that owns a

retail small business?

Sample Proportion .33 Sample Size 39

Critical Measure 1.64 Standard error 8%

+Confidence Interval Cont…

Upper Limit 46%

Lower Limit 21%

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Types of Businesses•34% chance the business type is retail

•42% chance the business type is restaurant

•24% chance the business type is not a restaurant or retail

+Decrease Customer Spending and Sales

6.48% chance that that a food type business has both decreased customer spending and decreased sales

0.922% chance that a retail type business has both decreased customer spending and decreased sales

+Increase Customer Spending and Sales

0.231% chance that a food type business has both increased customer spending and increased sales

4.938% chance that a retail type business has both increased customer spending and increased sales

+Average Company Age (Years)

Food Industry Retail0

2

4

6

8

10

12

Series1

Business Type

Com

pany A

ge

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0-5 6--10 11--15 16--20 21-25 29-300

1

2

3

4

5

6

DecreasedIncreased

Company Age

Num

ber

of

Busin

esses

Recession Impact of Spending Based on Age

+Sales Based on Age

0-5 6--10 11--15 16--20 21-25 29-300

2

4

6

8

10

12

DecreasedIncreased

Company Age

Nukber

of

Busin

esses

+

Other

(res

pons

e lis

ted

on n

ext p

age)

Fed/

Stat

e as

sist

ance

Great

Loca

tion

Incr

ease

pro

duct

s/se

rvices

selli

ng p

r...

Low b

usin

ess ca

pita

l cos

ts

Offer b

est c

usto

mer

ser

vice

Sell

high

qua

lity

prod

ucts

/serv

ices

Sell

low p

riced

pro

duct

s/se

rvice

s0

5

10

15

20

25

Number of Businesses

Business Strategies Frequency Chart

+Recession’s Effect on SalesHYPOTHESIS TEST 1

sample proportion 0.55

 

population proportion 0.5

  std error 0.081

  sample size 38Have sales in small businesses decreased by 50% (slightly or greatly) since the recession began?

NULL: =.50p    

ALTERNATIVE: <>.50p    

 

one-tailed or two-tailed? 2

test statistic (obs) 0.65critical measure 1.96

 

 

obs > critical? no

Sales have not decreased slightly or greatly.

Sales have decreased slightly or greatly.

+Recession’s Effect on Sales (Continued)p-value 0.51

a-level 0.05

 

 

p-value < a-level? no

        

Accept Null, Sales have not decreased by 50% since the recession began.

+Recession Effect on Customer Spending

HYPOTHESIS TESTS 2   sample proportion 0.39   

 

population proportion 0.5

  std error 0.081  

  sample size 38  

Do customers decrease spending by half (slightly or greatly) at small businesses during a recession?  

NULL: =.50p        

ALTERNATIVE: <>.50p      

 

one-tailed or two-tailed? 2  

test statistic (obs) -1.30  

critical measure 1.96  

Customers do not decrease spending slightly or greatly at small businesses

Customers decrease spending slightly or greatly at small businesses

obs > critical? no

+Recession Effect on Customer Spending

p-value 0.19

a-level 0.05

 

 

p-value < a-level? no

          

Accept null, Customers do not decrease spending by half at small businesses during recession

+Most Profitable Business Type

HYPOTHESIS TESTS 3  

sample proportion 0.55 

 population proportion 0.5

  std error 0.07  sample size 42Retail businesses are believed by half or more than half of other businesses to be the most profitable during a recession  

NULL: >=.50p      

ALTERNATIVE: <.50p      

 

one-tailed or two-tailed? 1

test statistic (obs) 0.62critical measure 1.64

 

 

obs > critical? no

Retail businesses are not more profitable

Retail businesses are more profitable

+Most Profitable Business Type (Continued)

p-value 0.26

a-level 0.05 

 

p-value < a-level? no

 

         

Accept null, Retail businesses are not believed by half or more than half of other businesses to be the most profitable during a recession.

+Successful Recession Business Strategies

HYPOTHESIS TEST 4

Customer Service

x-value sample 1 22

Low Prices

x-value sample 2 13  

 

for the proportion  

proportion 1 57.9%  

proportion 234.2%

pooled proportion 0.461 

sample size 1 38 

sample size 2 38

             

std error 0.114

 

Increasing customer service is claimed to be a more successful business strategy for small businesses than selling low priced products and services

NULL: 1> 2p p

Customer service does not bring more profit than low prices

ALTERNATIVE: 1<= 2p p

Customer service does bring more profit than low prices

 

 

one-tailed or two tailed? 1

 

+Successful Recession Business Strategies (Continued)

Reject null, Increasing customer service is said by local businesses to be a more successful business strategy for small businesses than selling low priced products and services

test statistic (obs) 2.071

critical measure 1.645

  |obs| > critical?? yes

 

p-value 0.02

a-level 5%

  p-value < a-level?? yes

+Best Industry During Recession

HYPOTHESIS TEST 5 Retailx-value

sample 1 8Food

x-value sample

2 3

 

for the proportion  

proportion 1 61.5%  

proportion 2

18.8%

pooled proportion 0.379  

sample size 1 13  

sample size 2 16

             

std error 0.181  

   

Small retail businesses average sales have increased more than small food businesses sales during the recession  

NULL: 1< 2p pRetail sales have not increased more than Food  

ALTERNATIVE: 1>= 2p p

Retail sales have increased more than Food  

   

 

one-tailed or two tailed? 1  

+Best Industry During Recession (Continued)

test statistic (obs) 2.362

critical measure 1.645

  |obs| > critical?? yes 

p-value 0.01

a-level 5%

  p-value < a-level?? yes

Reject null, Small retail businesses sales have increased more than small food businesses sales during the recession.

+REGRESSION ANALYSISOn the relationships between the company’s age and sales within the past year.

+REGRESSION ANALYSIS (cont’d)

+REGRESSION ANALYSISScatter Plot

0 0.2 0.4 0.6 0.8 1 1.20

5

10

15

20

25

30

35

Company Age (Years)

Company Age (Years)

Sales in the last year

Com

pan

y A

ge in

years

+Reporting

Food businesses overall decreased in customer spending and sales--6.48% vs. 0.922% for retail

Location and customer service most frequent strategies

Small business sales have not significantly decreased

Customer spending has not significantly decreased

Findings

+Reporting

Retail not believed to be most profitable by other businesses

Customer service better business strategy than low prices

Retail sales reported significantly higher than food sales during recession

Findings (continued)

+Reporting

Starting a new business: Start a retail business Focus on location and

customer service Not necessarily

unsuccessful during recession (sales and spending not decreased significantly)

Improve current business: Make customer service a

high priority Not low prices

Meaning of Findings

+Reporting Test the survey questions before handing out

Ask more directly related questions (employee age irrelevant)

Pass out more surveys to closer represent population

Include service businesses more in sampling

Improving Study

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Small Business Survival

Suggestions, Strategies, Tips, and Help

+Coping in a RecessionCalm Recession Fears: 5 Steps to Success

Do your best to take care of their needs

Keep in constant touch so that they remember your business when they need something

Special discounts or promotions

Watch over and monitor inventory and rotate as much as you can

Place orders accordingly

Saving money

1. Hold onto Your Best Clients 2. Keep Control Over Your Inventory

+Calm Recession Fears: 5 Steps to Success (cont’d)

Letting go of inefficient employees

Raise stronger employee salaries

Aggressive in marketing and

advertising campaigns

Increase market presence

3. Hold onto Your Best Employees

4. Increase Your Market Presence

+Calm Recession Fears: 5 Steps to Success (cont’d)

Get rid of credit cards if used to buy luxurious items

Browse other businesses when finding price and quality

Split large expenses to smaller ones

5. Keep Control Over Expenses

Follow these 5 Steps to Success to make your small business emerge leaner and economically fitter.

+In Conclusion…•Since the recession began, sales have not decreased within small businesses.

•Customer spending has not decreased by half within small businesses.

•Retail businesses are not believed to be the most profitable during a recession.

•An increase in customer service is a successful strategy rather than selling low priced goods or services.

•Within small business, retail stores have increase sales compared to food venues.

•There is no connection between how many years a company has been active and its past year's sales.

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+Works Cited 7 Recession Effects of the Recession Cycle

http://www.morebusiness.com/7-effects-economic-cycle

8 Ways to Recession Proof Your Business Opportunities http://www.morebusiness.com/8-ways-recession-proof-business

10 Causes of Economic Recession http://www.morebusiness.com/10-signs-recession

Business Week: Why Most Small Businesses Will Beat the Recession http://www.businessweek.com/smallbiz/content/jan2009/sb2009015

_212410.htm

Coping in a Recession: Calm Recession Fears: 5 Steps to Success http://www.morebusiness.com/navigate-recession-headwind

CNN: Small-Business Owners, Hit by Recession Seek Remedies http://www.cnn.com/2009/US/12/06/small.business.recession

+Works Cited (cont’d) National Business Association: The 6 Essential Small Business

Recession Survival Question http://www.nationalbusiness.org/nbaweb/Newsletter2009/2637.htm

NY Times: Some Small Businesses Grown, Even in a Recession http://www.nytimes.com/2009/11/25/business/smallbusiness/25gro

wth.html

One of 3 Small Businesses Unaffected by Recession http://www.bytestart.co.uk/content/news/1_12/small-business-reces

sion-effect.shtml

Preparing for a Recession: How to Survive a Recession http://www.morebusiness.com/survive-economic-recession

Recession and Small Business http://www.smallbusinessnotes.com/aboutsb/recession.html

Tips for Small Businesses to Survive Recession http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/03/22/BUSQV

MKH3.DTL

+Questions?

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