GlitchNYC.com
We’ve all heard that in business there’s no room for emotions but one important economic survey aims to capture a nationwide snapshot of how small business owners feel about the economy. Each month the Small Business Authority Market Sentiment Survey surveys 1,000 small business owners asking them questions gauging their sense of economic optimism going forward. The December survey returned some results that were even more optimistic than expected.
The survey found that 55 percent of small business owners believed that 2012 would be better than 2011 and 64 percent believe that their end of year figures would be better than they once believed.
In another data point, small business owners were asked how they plan to grow their business going forward. 68 percent believed that selling more was a better strategy than cutting costs. This, according to pollsters, indicates that small business owners feel more comfortable relying on consumers for growth instead of trying to run as lean as possible.
The Reasons for the Optimism
The survey results were surprisingly optimistic but some key economic indicators may be at the heart of this sentiment. First, the November jobs report, released on the first Friday of December, indicated that unemployment shrunk to 8.6 percent. (This number was later revised to 8.7%) This, along with the December figure of 8.5 percent, indicates that the economy is finally seeing a longer term sustainable improvement.
Second, Black Friday sales were stronger than expected indicating a healthier U.S. consumer. Even for businesses that aren’t in the retail industry, stronger retail sales indicate more discretionary income on the part of the consumer, a positive sign for any business. January has seen disappointing holiday figures from some retail stores like Target but others, like Macy’s, did better than expected. The consensus indicates that a strong Black Friday led to an impressive holiday season.
The Pessimists
20 percent of the surveyed small business owners indicated that they were still concerned about the health of the U.S. and global economy while 25 percent were neutral. If one out of every five business owners still feels uneasy about the economy, that is cause for concern but that number still represents a much better figure than in the recent past.
Two major headwinds are on the minds of small business owners. First, the European economy remains unstable and many analysts still believe that the worst isn’t over. Since Europe has an effect on the U.S. economy, small business owners want to see European worries subside before making big investments in to the growth of their operations.
Second, oil and other commodity prices remain on their minds. Oil has proven to be a very volatile market over the past five years and that doesn’t appear to be changing any time soon. One geopolitical event can dramatically increase the price of oil placing more pressure on the margins of business owners who have a high amount of transportation costs.
Finally…
It’s true that optimism is at its highest at the beginning of the new year but these figures indicate a shift in the sentiment of small business owners and experts believe that these types of shifts will build on themselves causing more small business owners to buy in to what looks like a sustainable up trend.