Small Business Economic Confidence Declines – OnlineBusinessDegree.org
Though U.S. small business owners do not share the same level of optimism as in previous months, the majority is still optimistic about the future of their businesses, according to the Mid-Year Economic Report released by the National Small Business Association (NSBA).
The NSBA conducts a similar economic report at the end of the year, and a common cycle is small business owners expressing higher economic outlooks and confidence levels in their businesses at the beginning of the year when the Year-End Survey is conducted. That positive outlook routinely deteriorates by July and August, when the Mid-Year Survey is conducted.
The mid-year report found that 55% of business owners are experiencing or expect to experience growth in the coming year. However, this percentage – down from 63% six months ago – is the lowest in three years. The economy is a likely factor for the drop in confidence.
The number of respondents anticipating a recessionary economy, at 34%, is the highest number since Dec. 2009. Forty-four percent of respondents say the economy is worse today than it was six months ago, up from 31% in Dec. 2011. However, the long-term economic outlook among small business owners is the highest it’s been in four years, with 23% saying the current economy is better than it was five years ago.
Respondents cite the most significant challenges to future growth and survival of their businesses as being economic uncertainty (68%), decline in customer spending (42%), and regulatory burdens (38%). Forty-nine percent responded they will use new advertising and marketing strategies to help grow their business, and 32% said they will use the Internet and expand e-commerce to do so.
As for job growth, 19% reported an increase in number of employees, down slightly from 22% in Dec. 2011, and 25% reported a decrease in number of employees, up from 23% in Dec. 2011. Twenty-five percent expect to increase their number of employees in the next year, down from 30% in Dec. 2011.
Sixty-six percent of respondents said their business is able to obtain adequate funding, and bank loans topped the list, at 46%, for ways companies financed their capital needs in the past year. Additionally, the amount of debt small businesses are carrying has decreased over the years. Currently, 73% of companies have debt, down from 78% two years ago and 80% five years ago.
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