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Small Businesses' Outlook on Economy

Small Businesses' Outlook on Economy

August 2, 2010

The National Small Business Association recently released its 2010 Mid-Year Economic Report, providing its take on the outlook for small businesses. Despite a slight increase in optimism just six months ago, small businesses reported decreases in nearly every indicator including business confidence, revenues, job growth and growth projections. 

Still, a group of those surveyed did say they were rebounding from the past two years. Nearly 10 percent reported their business was already growing, up from 7 percent who said the same in December 2009. And according to the survey, there was a "notable decrease" in the number of small-business owners projecting decreases in revenues (down from 31 percent to 25 percent) from the year-end 2009 survey.

Here are more highlights from the survey, which can be found here:

  • 73 percent of respondents cited economic uncertainty as the No. 1 challenge facing their business, followed by a decline in consumer spending, cost of health insurance benefits, federal taxes, and lack of available capital. (Read more about this in the distribution sector: 2Q Benchmarking Survey – Uncertainty Looms.)
  • Few small businesses (11 percent) hired new employees in the past 12 months and the net number of employers who cut jobs was 25 percent. Despite projections for the coming year faring better - a projected net increase of 5 percent - the majority projected no growth in their number of employees. (MDM/Baird Survey: Distributors Share Hiring Plans)
  • Nearly half do not believe there will be any growth opportunities for their business in the coming year and well over one-third - 41 percent - have concerns about the ongoing viability of their business. The majority of small-business owners (59 percent) expect the overall U.S. economy to be flat in the coming year, and 29 percent expect a recession.

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