This year, people have been paying more attention to unemployment news than sports news. Hopefully, that will change in the coming months, but right now, that’s the reality for Americans, especially, small business owners. With this Jekyll and Hyde economy, where NASDAQ companies hit record highs every day, and small businesses, particularly from the Food & Beverage industry, struggle to stay alive, following and diving deep into the unemployment rate is imperative.
Keeping up with unemployment news
Understanding the impact of unemployment goes far beyond looking at the 11.1% rate in June. Especially when we have a complex scenario that involves temporary layoffs, furloughs, spikes of the disease in some regions that could cause new lockdowns and a completely transformed consumer behavior after 4 months of quarantine.
First, a number you can follow weekly to stay on top of unemployment news is the weekly jobless claims published by the Department of Labor. In addition to analyzing the trend of how many American workers are filing for unemployment, small business owners can look at regional data to validate if national trends also apply to their states. This granular data is important for decision making as usually SME’s depend on local income stability as their primary source of revenue.
Then, we have the Nonfarm Payroll Employment numbers (another name for the monthly Unemployment Rate), published the first Friday of the month by the Bureau of Labor Statistics. The rate is based on two monthly surveys and considers those who are not currently employed and are actively looking for a job. The government report is extremely detailed, with data intelligence on the number of weeks that people have been unemployed, labor force participation rate, number of full-time and part-time workers, as well as interesting information on so-called Discouraged Workers, those people who believe no jobs are available.
Other important section of the unemployment report, especially for small businesses, is the data split by sector. Understanding the job levels in Leisure and Hospitality, Retail Trade, Education and Health Service, Manufacturing, and Professional and Business Services allows businesses to look at their sector as well as the segment of the economy that directly impacts their revenue. For example, small restaurants in Orlando and Las Vegas that depend on hospitality workers and tourists, need to keep a close eye on these specific numbers to plan their strategy.
Using unemployment data
Large corporations use this data. Investors in the stock market use this data. Small businesses should use this economic data. It’s as simples as that.
The unemployment rate has a huge impact on consumer spending and personal income, key factors that translate in potential revenue for your business. In the scenario of a pandemic in a touristic city, if air travel is down and disease numbers are still high, you can count that the number of tourists in your region will decrease and many people will lose their jobs, some temporarily and most of them permanently. As a small business owner, your marketing strategy has to switch to attract local customers from segments that haven’t been hit that hard, such as technology. Customizing your audience on Facebook and Instagram based on interests is a great way to leverage this information and optimize your spending on social media.
Other factor is understanding specific details about the unemployment scenario. For example, many Americans are receiving additional government benefits over their unemployment assistance payments. However, this additional cash in people’s pockets will end at the end of July. This means that you can be more aggressive in your marketing actions to generate emotional purchases while consumers have extra funds.
Furthermore, another strategy to apply while the unemployment rate is still in double digits is finding some loss leaders in your portfolio that you can use to maintain loyal customers during these hard times. When the economy recovers and jobs are back, you can expand your sales to items with a higher margin. Sometimes, even with lower margins right now, consumers keep your business in their minds, and this is way cheaper than spending later on to try to lure this customer back.
The Action: Follow unemployment news and use the data to your advantage, adapting your strategies according to the numbers.
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