A Tale of Two Surveys
Opinions expressed by Entrepreneur contributors are their own.Are small business owners starting to feel more bullish about the economy?
If you're a trend-watcher like me, it's hard to know for sure.
According to The National Federation of Independent Businesses' Small Business Optimism Index's latest survey, small-business owners are still reluctant to spend or hire, their confidence shaken by slumping sales, price declines and the ongoing credit crunch. The NFIB Index fell 1.3 points to 88.0 in February and has hovered between 86.5 and 89.3 since April 2009. That's below where the index stood in the depths of the recession of the early 1990s.
But, according to Discover Small Business Watch, a survey sponsored by Discover Financial Services, small-business confidence may be starting to turn around. Though the Discover index fell to 84.9 in February from 85.5 in January, the index was up 13 points over the 71.9 confidence mark recorded in February 2009 when the recession hit bottom. According to Discover, the number of small-business owners who think that the economy is getting better held steady in February at 31 percent. Only 44 percent of business owners surveyed said they thought the economy was getting worse, an improvement over the 46 percent who felt that way in January. Twenty-four percent saw the economy staying the same, up from 18 percent last month, and 1 percent weren't sure.
What accounts for the difference between the two surveys' findings? Well, a cynic might say that the first poll was conducted by a trade association that lobbies for legislation that helps small-business owners compete, while the second poll was conducted by a financial services company that wants to make sure that its small-business customers don't throw in the towel.
But I think there's more at work here. The Discover survey polled a group of small businesses with five or fewer employees, the kind of startups, sole proprietors and micro-businesses that don't have the same concerns as larger small businesses that have payrolls to meet and debt to service. By contrast, the NFIB poll surveyed 799 member companies, only about half of which employ five people or less.
This probably explains why most of the small-business owners polled by Discover said they weren't especially concerned about the small-business credit crisis that's made headlines for the last year and a half. Ninety-one percent told Discover that they'd never applied for an SBA loan, and most said they probably wouldn't apply for one even if such funding became available. By contrast, the NFIB respondents, a third of whom said they borrow money on a regular basis, continued to worry about the availability of credit going forward.
The bottom line is that not all small businesses are alike, and the concerns of a two-person home-based startup are poles apart from the problems facing a 10-employee restaurant or a 50-worker manufacturing company. The government needs to take that into consideration when crafting a policy that will give all small-business owners, no matter how large or small, the kind of help they really need.