Optimism about the economy is on the upswing, according to recent surveys. Big indexes are reading well – with high holiday sales, record cyber sales, and reduced unemployment. But, really – just how do small business owners feel?
A recent survey of small business owners’ problems and priorities conducted by the National Federation of Independent Businesses (NFIB) reports some good news. Attitudes about the future have improved, and priority concerns have changed.
There is a certain conservative element to small business futures. And, I think if you allow for that, there is a measurable sense of optimism about the coming months. For example, 14% of small businesses report having job openings and 3% expect to increase hiring. In addition, 21% plan on making capital outlays, and 7% feel it is a good climate in which to expand. The numbers may seem low, but they are increases over the past month.
There are continuing negative concerns about credit conditions, earnings trends, and overall economic improvement. However, these indexes reflect improvements over previous months.
The survey shows that financing and credit sources remain the #1 business problem. In October, reporting showed only 9 % felt all their credit needs were satisfied, and 11% found loans were harder to get. Of those surveyed, 26% report poor sales as their top concern. The optimism here is in the fact that, in most of these metrics, there has been cautious improvement.
I thought it might be interesting to look at the problems that rank among the lowest in the 75 measures of concern in the survey:
66. Competition from imported products is less a problem than it had been. This sense of balance is supported by recent reports on US trade balance.
67. Credit Rating does not seem to be a problem, suggesting that the owners have a confidence about their stability.
69. Competition from Internet Businesses is not the concern it was, admitting that, while there is competition, owners are more confident about their ability to manage it.
70. Undocumented Workers do not present the problem they did because employers are getting better at meeting their recruiting and documentation obligations.
71. Winning Contracts from Federal/State/Local Governments is a low concern, either because the businesses choose not to compete in such markets or because they have gotten better at the process.
72. Obtaining Short-Term (Less than 12 Months or Revolving) Business Loans is very low in the priority index because such loans are easily secured.
73. Obtaining Long-Term (5 Years or More) Business Loans is surprisingly low in the index and may indicate that owners have likely despaired of such financing sources.
Small businesses will feel economic recovery first. I am banking on the fact that their optimism is likely to be cautious and reserved. If I’m right, their measured optimism will underestimate the force of the recovery.
by Steven Schlagel