Small Business Leaders Are Pessimistic

Pessimism reigns among small business leaders responding to an annual survey, which showed serious decline in optimism from previous soundings.
Small business owners see a bleak picture for 2010 and are hoarding cash, reducing payrolls and generally pulling in their horns.
These are the overall trends revealed in Information Strategies, Inc., (ISI) 2010 Outlook Study.
Only 7% said they were adding to staff, while 27% of responders plan to replace only those staffers who left and one in five (21%) said they were reducing staff. The rest said they were unsure what they would do.
The figures for reduction and non-replacement are up a combined 20 percentage points from last year’s survey.
For more details on this survey, please click here:
With the healthcare reform bill seemingly on life support, small businesses are breathing a sigh of relief for one more year.
At the same time, Health Savings Accounts are growing as a preferred option with more than 11 million Americans now covered.
Small businesses generate four out of every five new jobs in the US and this trend, if mimicked by other small firms would indicate a slow return to full employment.
This trend surfaced for the first time since ISI began conducting this annual survey in 2004.
More than 400 businesses ranging in size from 3 employees to 240 staff members were represented in the sampling.
ISI supplements the survey with focus groups where the trends were also reflected and reinforced in the sessions.
While a majority (52%) expected their business sector to improve, only 21% thought their company sales and profits would increase.
One in five respondents thought their sales and profits would decrease this year.
This pessimism was reflected in responses to detailed questions about staffing and expenditures.
For the first time in six years, almost half of the respondents said they were reducing debt load (49%) and increasing their cash position (27%). Both of these figures were up by 20 percentage points from last year’s survey.
Hardest hit are expected to be employee benefits, technology investment, property, plant equipment and in rent and real estate.
On the plus side, a plurality (39%) reported that they expected to spend more on sales, marketing and advertising.
Interestingly, travel expenditures were also expected to be up with the expectation that more personal contact for sales purposes was needed.
At the same time, 52% of respondents said they were shifting print promotional funds into Internet venues.