State of the Economy: Small Business Owners Remain Optimistic
Small business owners were hit hard by the recession. According to Equity News, the industries that took the brunt of the hit were construction, real estate, and service companies. In fact, small businesses suffered 60% of U.S. job losses in total. In 2009, The New York Times' small business blog reported that "While the number of business bankruptcies has been going up since the beginning of 2006, the number of bankruptcies during the recession is well above the pre-recession trend."
Despite all this, small business owners remain optimistic. According to an American Express OPEN Small Business Monitor survey released in April, "35% of small business owners with less than 100 employees plan to hire new workers this year, the highest level since the fall of 2008." 37% of businesses expect to grow their sales and profits this year, though 66% of businesses surveyed are concerned about cash--an all-time high in the survey's history.
Other surveys, like the February 2011 Citibank survey, find that the majority of the nation's small business owners believe 2011 "will be better than (44%) or the same (42 percent) as 2010." However, business owners are still concerned about raw materials prices (25 precent) and increasing healthcare costs (23%). Many also plan to expand in 2011, by increasing marketing and employee productivity.
According to the Houston Business Journal, Insperity's business confidence survey found that 76% of survey respondents said "that they are either meeting or exceeding their 2011 performance plans, while the remaining 24 percent reported that they are doing worse than expected." 37% also reported that they were hiring adding new positions. Supporting the optimism trend is Braun Research's recent survey, 41% of the 2000 small business owners surveyed believed that "economic conditions are improving" and 61% believe that 2011 will be a more auspicious year than was 2010.
Sure, there's concrete evidence to back up their rising sentiments. In January of 2011, Intuit and The Huffington Post reported that small business jobs were about halfway to pre-recession levels. According to Susan Woodward, former chief economist at the Securities and Exchange Commission, It's because small businesses are quick-minded. "When there's a recovery, small businesses recover first because they're more nimble at dealing with a slack labor market than big firms." Part of the reason why is because "big corporations, unlike small firms, have Human Resource departments that tend to make adding jobs a five-week long ordeal: three weeks before they're authorized to hire a new worker and then another two weeks of arguing about how much they can pay such a person."
Want to know how small business owners are planning on riding out the remainder of the recession? The Small Business Association has a number of tips for surviving an economic downturn, including tips on how to make marketing work, utilizing technology effectively, and leveraging financial lifelines.
