Study: Merchants report waning confidence in the economy

Study: Merchants report waning confidence in the economy

So how is the economy doing right now? Don't ask a small-business owner -- unless you can handle a strong dose of negativity, according to a recent study.

The National Small Business Association (NSBA) waded into that debate with its "2011 Mid-Year Economic Report." The Washington, D.C.-based group surveyed 400 of its members in June and July of 2011 and found widespread concern -- if not outright anxiety -- about economic conditions across the board.

"Eighty-eight percent of small-business owners anticipate a flat or recessionary economy in the coming year, the highest it's been in two years," said NSBA President Todd McCracken  in a statement. "This negative economic outlook is causing a growing lack of confidence among small-business owners."

Lack of confidence is putting it nicely, say merchants. Wide swaths of the 400 surveyed business owners say that not only are current conditions toxic for sales, but a forward look down the road reveals no significant pick-up in confidence, either.

Some highlights from the report:

• 45 percent of small-business owners say they anticipate no growth opportunities in the next 12 months. That's up from 40 percent from the last NSBA survey in December 2010.
• 36 percent of survey participants say they can't get decent business financing, primarily because banks aren't lending and venture funding firms have ducked for safety until the economy improves. Things have grown so sour that 19 percent of small-business start-up owners are using credit cards to help run their businesses, paying more than 20 percent in interest charges. (That number is up from 13 percent in December).
• 33 percent of respondents to the NSBA survey say they won't hire new employees because of the rising cost of health care.

Not all the news was dour. The survey reports that, overall, U.S small businesses showed "modest" hiring gains in the past six months. And there was a slight uptick in the number of companies saying they plan to add to staff in the next year.

In addition, business owners do have some definite ideas on how policymakers can begin to fix the economy. The study showed that small-business owners rank their top priorities as follows:

• Cutting the national debt.
• Reducing taxes.
• Reining in the high cost of health care reform.
• Cutting regulations and red tape that are slowing down businesses.

"Nearly one in three small-business owners named the growing U.S. debt the No. 1 challenge facing their business," said Larry Nannis, CPA, chairman of the NSBA, in a statement. "Lawmakers ought not downplay the ramifications of the ongoing deficit debate -- and lack of a long-term solution -- on America's small-business owners."

The NSBA has been around since 1937, and with 150,000 members, certainly has its fingers on the pulse of the U.S. small-business owner. The survey is well worth checking out. But be forewarned -- reading it isn't for the faint of heart.

Published: August 31,2023