The National Small Business Association (NSBA) recently released its Mid-Year Economic Report, which is a snapshot of how small businesses are faring today, and the news isn’t pretty. According to the report, small-business owners are less optimistic about the outlook of their own firms than in the previous six months.
It seems that six months ago, the number of small-business owners who anticipated a recessionary economy was just 14 percent. Today it is 34 percent--the highest it’s been since December 2009. And the number of small-business owners who are not confident about the future of their own business increased from 25 percent six months ago to 40 percent today, the largest increase in almost five years.
“Small business owners are concerned about the economy, the impact of health care legislation and the status of the Bush-era tax cuts. Many small business owners are unsure of what plans to implement in terms of growth with questions about taxation and health care looming and unanswered,” notes Elle Kaplan, CEO and founding partner of investment management firm Lexion Capital Management LLC. “Fear and pessimism are often based on the unknown. Once those questions are answered--no matter how they are answered, business owners will be able to plan and feel better about the outlook of their company.”
“Small businesses are less optimistic due to the uncertainty in Washington with various regulations, health care, tax uncertainty, etc. We’re a small business and the uncertainty is affecting how we manage our business and the portfolios of our clients. Whether you are a Democrat or Republican, it would be helpful for small and large businesses if our elected officials reached a conclusion regarding the fiscal cliff; regulations; possible expiration of the tax cuts; and provided clarity regarding health care,” offers Thomas Balcom of 1650 Wealth Management.
But Fred Lizza, CEO of Dydacomp, says more patience is needed. "It’s understandable for small business owners to be less optimistic because they’re the most likely to feel the impact of a slow recovery. However, we work with thousands of small businesses and their overall growth is starting to improve. We monitor the trends every month through our Dydacomp SMB Index," he says. "The statistics reveal that, although some verticals, such as jewelry, are still being affected by consumer spending, others are experiencing significant growth. Based on the numbers, we’re anticipating a much better holiday season than last year. So while there’s a lot of pessimism out there, we’re feeling more positive about our customers’ growth."
But other data surveying SBA manufacturers found them to be more optimistic. The recent survey was consulted by Sage, a provider of business management software. “Our results seem to indicate that SMB manufacturers are hiring — and will continue to hire in the coming months — and that generally they’re optimistic about their businesses,” said Joe Langner, executive vice president, mid-market solutions for Sage North America. The survey found that of small business manufacturers, 27 percent believe their businesses will grow within the next 6 months and 33 percent believe they will add employees in the next 6 months.
If your small business is still feeling the pinch, Lizza says to take action. "According to the Council of Economic Advisors, small businesses have contributed to 64 percent of new jobs generated nationally over the last 15 years. It is critical to keep small businesses healthy and growing. We recommend small business owners start by taking a hard look at back office costs associated with running their business," he advises. "Make sure you have the right order management and eCommerce tools in place to help you effectively and efficiently drive sales while streamlining operations. There are many resources available, including the National Small Business Association, free industry eBooks and thought leaders who can provide sound advice for growing a business. It’s imperative we all work together to secure the health of small businesses."