The latest Discover Small Business Watch confirms what any small-business owner with a pulse already feels: fading faith (or lack thereof) in the future of our nation’s economy.

From August to September, economic confidence fell more than 12 points among 1,000 randomly surveyed businesses with five or fewer employees. In addition, 51 percent believe economic conditions for their businesses are getting worse, up from 44 percent in August; 73 percent believe the economy is getting worse, up from 60 percent in August; and 72 percent of those seeking loans say it is harder to borrow money right now.

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River Cruiser’s Novel Idea, a Budget

The Borgstrom family’s Wendella Boats becomes a real business

Wendella Boats has been chugging along for seven decades since Albert Borgstrom first weighed anchor on a 6-foot wooden yacht retrofitted to carry 100 passengers on half-hour cruises on the Chicago River. But while Wendella guides seem to know every jot and tittle about Chicago, it wasn’t until 2006 that the family-owned company got a fix on its finances.

Like a captain without a compass, Wendella had no budget, no organizational structure, no pricing guidelines, no financial plan—nothing. Its officers did not know which operations made money because all income and expenses were lumped together. "I know boats. I didn’t know anything about business," admits Wendella President Michael Borgstrom, 47, the grandson of the founder.

Today it’s smoother sailing for the company, which employs 140 during the peak summer season and generates $3 million to $5 million in annual revenue. Spreadsheets track everything from the amount of fuel used per hour to the number of drinks poured by the company’s crew of bartenders. Wendella has bumped up prices to guarantee no cruise operates unprofitably: A 90-minute lake/river tour costs $23 per adult. And the company is better positioned for a potential sale in the unlikely event that the fourth generation of Borgstroms—the eldest of Michael’s four daughters, Christie, 23, is already is doingpublic relations in the Wendella office—opts out of the tour boat business.

Ticket Prices Too Low It was another local, family-owned firm, Park Ridge (Ill.) management consultancy George S. May International, that challenged Borgstrom to take a deeper look at his company’s operation. "We came to Wendella Boats to talk to Michael about his largest competitor, Waste Inc.," jokes Paul J. Rauseo, managing director at May, which specializes in small and midsize companies.

Glen Boggs, a senior executive at May, broke the company into segments—tours (60% of sales), charters (30%), water taxi (10%)—and crunched numbers. He quickly determined Wendella’s taxi business was unprofitable, largely because ticket prices were too low. Charters were hit-or-miss. For example, Wendella charged $5,000 to charter a boat to watch fireworks on Venetian Night, but needed to bill $8,000 to cover costs. Liquor control was so poor that bar services were barely breaking even.

Perhaps most important, Boggs showed how it made financial sense to spend $2.5 million for a larger tour boat to replace three smaller vessels. The 89-foot Wendella II seats 340 on two decks and carries a crew of six, including a bartender. "The new boat gives us a niche we did not have," Borgstrom says.

Wendella’s water taxis, which charge $2 per ride, are now generating profits after a major marketing push that included a separate Web site and bright yellow paint jobs. Service between the West Loop train stations and Michigan Avenue has been increased, and over the summer, the taxis will shuttle riders to Ping Tom Memorial Park in Chinatown. Ridership is up 40% over last year. Meanwhile, Borgstrom has written a 20-page "playbook" (BusinessWeek.com, 1/7/08) to keep operations on track, even as fuel prices soar. "We see a lot of growth," he says. "And now we know how to handle it."

Cost Cutters: Ways Employers Can Save on Holiday Expenses

November 13, 2008
By Diana Ransom

Amind widespread layoffs and other financial cutbacks, throwing a lavish holiday party or spending top dollar on year-end gifts for your employees — even if you can afford to do so — may seem, well…. frivolous.

“If your employees are living paycheck to paycheck and you give them a box of chocolates to show your appreciation, expect some employees to chafe,” says Paul J. Rauseo, managing director of George S. May, a small-business management consulting firm in Chicago. “These people are struggling to put gas in their tanks right now. The last thing they may need is chocolate.” The same applies to clients as well, he adds. “Instead of giving gifts that may be viewed as impractical or insensitive, think about what it is they could really use.”

Of course, it was a difficult year for many businesses, as well. Properly showing your appreciation for employees during the holiday season not only needs to be tasteful, but also affordable. Here are six budget-conscious — and appropriate — gift ideas to consider: (more…)

Don’t make wellness a budget casualty

By Connie Roethel , for SBT Published October 17, 2008

As the economy tightens, America’s small businesses are struggling with ways to respond to today’s market conditions. In a recent Milwaukee Biz Blog, Steve Jagler, executive editor of Small Business Times, referenced a new poll of 516 small-business owners across the United States conducted by management consulting firm George S. May International. In the survey, American small-business owners ranked the following issues as the most important to them: the economy (23 percent); health care (20 percent); taxes (17 percent); the Iraq war (15 percent); energy (12 percent); housing (7 percent); and immigration (5 percent).

With health care ranked as the second-highest concern and, for many employers the second-highest cost, it seems imperative that efforts to keep the workforce healthy and productive should continue, despite serious concerns about credit, budgets and cash flow.

In years past, doing wellness programs on nominal budgets and sometimes at no cost was common. Staff and practitioners got by on minimal dollars, health fairs, creativity and free community programs.

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Survey Shows 71 percent of small business owners can’t name one way either candidate can help them

An overwhelming majority of small business owners feel they’ve been left out in the dark in terms of having either U.S. presidential candidate address specific proposals that would assist them, a new survey shows.

The poll of 516 small business owners across the United States, conducted by management consulting firm George S. May International www.georgesmay.com, showed 71 percent of respondents saying they cannot name one way either U.S. presidential candidate will help their business. However, 59.5 percent of respondents said they felt that Sen. Barack Obama is the presidential candidate that would do the most for small business owners, while 39.3 percent said they felt that Sen. John McCain would do the most for small businesses. 0.4 percent responded that both candidates would do the most for small businesses and 0.8 percent said neither candidate.

Sixty-six percent of respondents say they wish both candidates were more specific about their positions on issues. The economy and healthcare ranked as the most important issues among those surveyed, with 23% noting the economy and 20% saying healthcare. Other issues ranked as most important by small business owners were taxes (17%), the Iraq war (15%), energy (12%), housing (7%), and immigration (5%).

“The results of the survey show that no matter which presidential candidate is elected into office this November, he will need to specifically address the issues of most concern to small business owners who are the backbone of America and who want answers,” said Israel Kushnir, president of George S. May International.