Small Businesses Are Still Worried And Cautious About Their Futures

Proceed With Caution

The September Index of Small Business Optimism from the NFIB shows little change from previous months.  In fact, there has been little change for the past two years.  Small business owners still lack of confidence in their economic futures.

Numbers show that small business owners are not ready to start hiring. Average employment growth per firm in the September survey was negative like it has been in all but two months since January 2008.

Only 11% reported unfilled job openings, unchanged from August. And over the next three months, a scant 8% plan to increase employment, while 16% plan to reduce their workforce.  The percentage of those planning reductions is up from last month by three percentage points. 

Another sign that small businesses lack confidence is that only 6% characterised the current period as a good time to expand facilities.  Furthermore, sales continue to be weak for small business and small business owners continued to liquidate inventories. 

Earnings, which other surveys suggest have stabilised due to belt tightening, deteriorated in this survey by three points in September.   Owners continued hold the line on compensation to help combat tightening profit margins. 

Perhaps most telling is that small businesses are saying a loud “No thanks!” to small business credit. Overall, 91% of small business owners reported that all their credit needs were met or that they were not interested in borrowing.  A near record low 33 per cent of all owners reported borrowing on a regular basis. 

Small business growth is not looking good.

Dr. Jeff Cornwall is the inaugural recipient of the Jack C. Massey Chair in Entrepreneurship at Belmont University in Nashville, Tennessee.  He also serves as the Director of the centre for Entrepreneurship.  He has published six books and numerous articles on entrepreneurship. This post was originally published on his blog, and it is republished here with permission. 

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