WASHINGTON – Dried-up credit markets continue to frustrate small business owners, but some are beginning to look to nontraditional business models – even experimenting with free goods and services – to generate revenue.
Molly Gimmel, 41, was among the hundreds of businessmen and women looking for tips and, perhaps, reassurance at the GrowSmartBiz conference Tuesday.
Gimmel, 41, executive vice president of Design to Delivery Inc., said the recession still is hurting her suburban Washington company that specializes in securing business contracts for small business owners. Her tip: Government contracting is one of the few funding avenues left. According to the U.S. Small Business Administration, $93.3 billion in federal contracts was disbursed during fiscal year 2008.
“There’s a lot going on,” Gimmel said. “A lot of small businesses are involved.”
But Sen. Mark Warner, D-Va., offered little reassurance for those business owners interested in running a private-sector operation – at least if they’re looking for government help.
“These are about as tough a times as anything I can remember in my experience in business over the last 25 years plus,” said Warner, who co-founded Nextel Communications Inc., now a part of Sprint Corp. “We’ve spent so much time from the policy perspective shoring up financial systems … not near enough time has been spent helping and shoring up the small business sector.”
“I don’t have [the answer] right now,” Warner said, “but I would love to hear it from you all.”
Carla Morelli, who owns FreyerMartin, a consumer bill-paying service in Gaithersburg, Md., wanted more.
“Those are all nice ideas,” Morelli, 39, said of Warner’s speech. “[but] in the early days of an industry (like personalized bill management), where losses are normal, there’s no help for us.”
Other business owners are weathering the recession by offering free Web-based content. The concept was the cornerstone of the message of conference’s keynoter – and “Wired” magazine editor-in-chief – Chris Anderson. His new book, “Free: The Future of a Radical Price,” encouraged business owners to explore “the clever psychology of figuring out how to bring people in [through free content] and convert them.”
Clarence Wooten, 38, is a disciple of Anderson’s “freemium” model. Wooten owns Groupsite.com, a Columbia, Md.-based social networking startup that relied heavily on angel investors who grew scarce in 2008. But when Wooten started offering 70 percent of the site’s services for free, cash-strapped consumers “swam downstream” and Groupsite turned around a sustainable profit, he said. The investors, Wooten said, are starting to come back.
“You’re equally as powerful,” Wooten added, “but it’s a lot less expensive.”