Small-Business Owners Bunker Down Amid a Weak U.S. Economy
Business owners are grappling with continued economic uncertainty. One thing is for sure: They are going to hit the polling stations in November.
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If you are feeling on edge about your business, you are not alone.
From slower sales growth to regulatory burdens, many entrepreneurs continue to face challenging headwinds. Judging by the slew of recent downbeat business reports, small-business owners may be feeling frozen by the political uncertainty in Washington and sluggish economic recovery.
"They are typically savvy business people running their companies, but they need to know what policies are coming down the pike so they can plan," Brian Hamilton, the CEO of private-business data-mining company Sageworks, said this week at the Harvard Club in New York at a forum called "Analyzing America's Private Companies."
"You have got all these things looming out there -- the election being one of them -- and I worry that is going to continue this anxiety and I specifically worry about jobs," he said.
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The job market overall showed some improvement Friday. The U.S. unemployment rate decreased to 7.8 percent in September, according to a report from the Bureau of Labor Statistics, down from a narrow range of 8.1 to 8.3 percent for the first eight months of 2012. The economy overall added 114,000 jobs in the month, the report found. While the jobs report is a positive sign for the economy -- and President Obama's re-election bid -- a worrisome note is that much of those job gains came in the form of part-time workers.
But one thing is for sure: The dour environment has small-business owners raring to have their voice heard in November. More than nine in 10 business owners surveyed for the U.S. Chamber of Commerce at the end of September report that they are "very motivated" to vote in the coming presidential election.
Here's a look at how small-business owners are faring on some of the most critical issues based on recent reports:
Sales: Sales are growing. However, the pace that sales are growing for private companies is decreasing, according to Sageworks. The average annual sales growth is 5.4 percent in the three months ended Sept. 7, 2012, down from 8 percent at the same time a year ago, according to the Raleigh, N.C.-based company.
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Access to capital: While business owners are demanding less capital overall, those small businesses that want financing are having a tough time getting what they need, according to a survey released this week from Pepperdine University Graziadio School of Business and Management and Dun & Bradstreet Credibility Corp. Seventy-eight percent of the surveyed businesses with less than $5 million in annual revenue said it was difficult to get the funding they needed. And to make ends meet, nearly half of the small-business owners have sunk personal assets into their business.
Uncertainty: Nearly half (49 percent) of small-business owners say they aren't sure whether their business's best days are still to come or in the rearview mirror, according to the third-quarter small-business study from the U.S. Chamber of Commerce by polling firm Harris Interactive. That marks an 11 percent increase since June 2011. And that's what entrepreneurs want from political leaders in Washington: certainty. The Chamber survey says that about nine in 10 (87 percent) want their elected leaders to give them confidence in their future.
One major pain point for small-business owners is the imminent "fiscal cliff," a series of tax changes due to come into effect Jan. 1, if Congress does not act. More than nine in 10 (93 percent) of the 1,392 small-business executives surveyed for the U.S. Chamber of Commerce say they are concerned about it.
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Hiring: Only 17 percent of the Chamber's survey respondents said they are "likely" to make any new hires in the coming year, compared with 61 percent that say they don't expect to hire in the next year.
Profitability: A bright spot in the otherwise bleak picture for small-business owners is that they are turning bigger profits, primarily because they are doing more with less. The most recent data underscore that longer-term trend. The average annual net profit for private companies over the past three months was 9.1 percent, up from about 3 percent in February of 2010, according to Sageworks.
How is your business doing right now? Leave a comment below and let us know.