The Fed says the Great Recession is over, but it sure doesn't feel that way for SMBs. New studies and surveys from a variety of sources show that small and midsize businesses are thinking about their economic futures. And while it isn't all doom and gloom, it ain't particularly pretty either.
Most everyone seems content to simply punt the question of when a real recovery will come until next year at the earliest. Unfortunately, that doesn't necessarily mean everyone thinks we'll see a recovery then. It just mean that they're pretty sure we won't see one
Small Businesses Think Things Are Getting Worse
What does that nasty business climate mean on the ground? For 60% of small businesses it's a decrease in sales, while 50% are suffering with slower customer payments.
On the plus side, though, some 60% of small businesses still expect to grow during the next year, and 44% plan to hire new employees.
Is the growth and hiring due to the Federal Stimulus? Hardly. 98% says they've gotten nothing from the program, and 74% say they haven't even taken advantage of what's available to them.
(As for the other big political issue, nearly 90% say that health insurance benefits is key to attracting and keeping talent, but 58% of the companies surveyed don't offer health benefits to employees. The biggest reason? They can't afford it.)
Financial Executives Fear Double-Dip Recession
But their predictions for the future haven't brightened. Less than half (47%) expect conditions to improve in the next 6 months -- the same percentage as last quarter. Asked when they expected a recovery to begin, most thought not until mid 2010 or later!
And even then almost half expect a W-shaped -- or double dip -- recession. Ugh.
No wonder then, that layoff plans have grown (32% - 39%) while hiring plans have shrunk (21% to 14%). Double ugh.
Why the pessimism? Lack of demand is the big problem, cited by 64% of companies, while followed by credit/financial market stability (47%). Everything else -- expense cuts, competition, the falling dollar, energy policy, inflation / deflation, etc. -- pales in comparison.
Ultimately, the only thing they're sure of is that they're not sure of anything. Some 57% say business uncertainty is high or very high, up from 45% last quarter.
Worst-Case Scenario
In fact, Angrisani cites credit-reporting agency Equifax as reporting that U.S. small business bankruptcy rates jumped 81% in June 2009 -- compared to a year earlier-- as more than 10,000 small businesses closed their doors.
Yikes!
The survey of 150 owners of businesses with fewer than 100 employees -- performed for Angrisani Turnarounds by Toluna Research -- also revealed that more than half (54%) cite employee expenses (health care, minimum wage requirements) pose the biggest risk to their businesses. More than a third (37%) cited taxes as the biggest risk, compared to just over a quarter (27%) who were worried about the credit availability.
Reprising results of the Intuit poll, just over half (52%) said they were unlikely to hire new employees in the next two months, compared to 20.4% who were likely to hire. And 80% said they had not received stimulus benefits.
Bottom line from these three different looks at the state of small businesses? Lots of confusion, with the only thing everyone seems to agree on is that we're not out of the woods yet.
Heck, even Microsoft CFO Chris Liddell doesn't expect to see a corporate PC refresh to Windows 7 until next year -- according to ChannelWeb. And even then, Liddell sounded more hopeful than confident:
I think that just about sums up how everyone's feeling right now.
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According to a recent Intuit Payroll study of more than 1,000 small businesses, 81% call the current business climate "Poor" or "Just Fair."
Who are those 3% who think things are excellent?
Workers at the 16% of companies who will grow without hiring can expect to be very busy.
If small businesses are giving off mixed messages, financial executives -- in companies of all sizes -- are clear about the bad news. According to a new survey by on-demand financial planning and reporting vendor Adaptive Planning, 42% say things are worse now than 6 months ago -- which is actually an improvement from last quarter when 53% held that view. A quarter say things are better now, up from 15% last quarter.
Al Angrisani, CEO of Angrisani Turnarounds and former Assistant U.S. Secretary of Labor warns that "small businesses are failing at an unprecedented rate and, according to our survey data, about two-thirds of small business owners are concerned or extremely concerned about business survival through the next two years."
"This can't continue forever. Eventually those PCs wear out and have to be replaced. We hope and expect [the refresh cycle] to be next year."
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