If you’re looking for relief from surveys and reports that say small business owners are feeling bleak: Stop.
The data is everywhere. It comes from small business associations and advocacy groups seeking to get the attention of lawmakers and big business. It’s commissioned by companies hoping to use the information they collect to draw attention to the products and services that they sell. And then there are reports from industry groups, academic institutions and think tanks looking to find new information and insights to help small business owners.
For at least a year — through the presidential election and the fiscal cliff crisis — part one and part two — surveys and reports showed little change. In the next several months, small businesses and the people interested in their success should brace themselves for more of the same. Right now, small companies have a lot of reasons to avoid risk:
Economic and policy hurdles » Health care costs are uncertain and federal budget cuts are squeezing businesses’ profits and people’s pocketbooks.
Revenue is down » A survey by software maker Intuit shows that small companies’ revenue fell nearly 1 percent in the six months that ended in January.
Borrowing is almost stagnant » PayNet, a company that supplies credit ratings for small businesses, says owners have barely increased their borrowing in the past year.
Small business owner Terri Slater is uneasy about her public relations company because two clients put marketing campaigns on hold after they lost venture capital funding. Prospective clients are taking twice as long to decide whether to take her on. She uses freelancers to get marketing projects done.
"I don’t feel comfortable enough to make an investment in new employees because I’m not sure of the health of my client base," Slater says.
Expectations are low. The year-end survey of owners by the National Small Business Association found that 38 percent anticipate growth opportunities for their companies this year. That’s down from the 47 percent who predicted growth in 2012, the trade group says. Sixty percent expected to keep their staffing levels stable this year.
"I’m right in there with other small business owners — I have no intention of hiring," says Mark Hagar, owner of Specialized Printed Products in Fort Wayne, Ind.
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Hagar is cautious because his customers, who are also small business owners, aren’t ordering as many printed brochures or running as many direct mail marketing campaigns as they did before the recession.
"There’s this great big circle of gridlock," he says. "They’re not going to buy anymore because they’re uncertain about what their customers are going to do."
Hagar’s sales were up about 2.5 percent last year, and he doesn’t expect to do better this year. He doesn’t need new equipment, so he has no plans to borrow money.
"We’re not going to have any real growth," he says.
Owners are reluctant to hire or expand because their revenue is down, says Susan Woodward, an economist at Sand Hill Econometrics in Palo Alto, Calif., who tracks small business revenue for Intuit.
"They were all recovering for a while. Then in early 2012, their revenue began to flatten," she says.
The picture isn’t completely dark. The housing market is recovering and the stock market is rallying. If that gets consumers to spend more, small businesses may pull out of their funk.
There are two key positive signs, according to Martin Regalia, chief economist for the U.S. Chamber of Commerce, which represents 3 million businesses:
The housing market is improving » Sales of new homes hit their highest level in four and a-half years during January, according to government figures. And previously occupied homes sold at their second-best level in three years, the National Association of Realtors reported. Sellers are getting higher prices for their homes, according to the Standard & Poor’s/Case-Shiller 20-city home price index.
Stocks have rebounded » The Dow Jones industrial average reached an all-time high above 14,000 this week and has more than doubled from the low it hit in March 2009, during the financial crisis. That’s increasing consumers’ net worth and sense of well-being.
A healthy housing market and a persistent stock market rally could spur consumer spending and a revival of growth and hiring at small companies, Regalia says.
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