During the recession, downtown Santa Rosa jeweler Doug Van Dyke watched his cash flow decline, prompting him to add less costly merchandise to his jewelry cases.
"We were clearly able to see we had to adjust our price point," said Van Dyke, who owns E.R. Sawyer Jeweler on Fourth Street with his wife, Ame. To be successful, the couple said, the change required that a customer who previously had spent $2,500 on a purchase would still feel comfortable and satisfied buying a gift for $1,000.
Such efforts helped the net revenues at the 135-year-old business grow by double digits each year since 2009, said Van Dyke, the fourth generation of his family to own the store.
Experts say the Van Dykes' financial watchfulness and their ability to adapt are two key traits of successful small business owners.
Today's owners also need to develop a deep knowledge of their market, including their products, customers and competition. And they must be able to devise business plans that can properly guide their efforts.
Monday kicks off National Small Business Week, a recognition that half of America's workforce either owns or works for a small business. Two of every three new jobs are created by such companies, which for many companies can employ up to 500 workers, according to the U.S. Small Business Administration.
What sets small business owners apart is their willingness to work long hours in exchange for the chance to direct their own labors and to reap the rewards of any success.
"They have a passion around what it is they want to do," said Sherrill Stockton, a senior vice president and SBA program manager at Santa Rosa's Exchange Bank.
But some needed skills don't come naturally, experts said. For many owners, the biggest challenge involves learning to use key financial measurements to manage their businesses.
"People get into business because they're good at something. Most often, it's not finance," said Michael Downey, senior vice president of business services at Redwood Credit Union in Santa Rosa. The credit union's business members include the Van Dykes.
A study released last month found that many small business owners experience cash flow problems and often have little in reserve to help their companies weather downturns.
The "microbusiness" study by the nonprofit Corporation for Enterprise Development in Washington conducted 716 online surveys and 216 phone surveys with owners whose companies had 10 or fewer employees and less than $2 million in annual revenues.
Fifty-five percent of the online respondents said they could cover their business expenses for only one month or less. Of those, three in 10 said they had no business savings at all. Even among respondents to the phone survey, which involved more established businesses, nearly half of the owners had business savings accounts that could cover just two months or less worth of expenses.
For all the surveyed owners, roughly four in 10 said they don't have enough cash on hand at times to meet their business expenses.
Small business owners could benefit from affordable credit to help them make it through the down cycles, but they also need to do a better job of saving, said Manny Hidalgo, the nonprofit's director of entrepreneurship.
"You've got to be ready for that rainy day with your own resources," he said. Otherwise, business people can end up dipping into personal savings or even into retirement funds, "which is disastrous."