The economy's continual improvements over the last few years have been substantial, and buoyed many small business owners' hopes of seeing their companies succeed. However, there still remains a fair amount of pessimism about the ability of their enterprises to continue growing in a satisfactory way over the course of the coming year.
Much of this negative feeling, though, seems to be rooted in the fact that the economy is still not even in a position that is comparable to when the economic downturn began several years ago, according to a report from the National Federation of Independent Business.
As of its December poll, the group's Optimism Index came in at just 92.5, well below historical norms and very much in line with the readings seen at different points since the recession, during which time it has largely fluctuated between 86.4 and 95.4. However, it's important to note that the most figures were up by nearly a full point from the previous month's level. Nonetheless, the index had an average reading of about 100 for the entire time from 1973 to 2007, indicating that the recovery still has a long way to go to make small business owners nationwide feel better.
Most of the uptick in optimism this month came because companies are feeling better about their abilities to hire and retain workers, the report said. The average business brought on 0.05 workers over the course of November. This may not seem like much on a per-company basis, but when adjusted seasonally, it actually comes to about 14 percent of companies actually hiring people, and those that did brought aboard 3.7 workers each during the month. However, another 12 percent cut employment, and did so by an average of 3.4 employees.
Further, it should be noted that more than half of all companies polled said they'd tried to hire someone at some point in the last three months, but more than two in five said that they had difficulties in finding few or any qualified applicants, the report said. That was the highest number of companies trying to hire new workers seen since October 2007, around the time the recession began in earnest.
Other aspects of the small business sector, however, were not so strong, the report said.
"Domestic sales grew only 1.9 percent, more in tune with other measures of how well the economy is doing," the organization wrote in reporting its findings. "Inflation was low as expected from the NFIB data as few are raising prices. Employment was better at the end of the year, as the NFIB indicators anticipated – but not enough to restore 2007 levels of employment, six years later. The only item in small business owners' "top 10" list of issues is that energy prices are falling. So unfortunately, not much to be optimistic about."
Other aspects of the index
Today, very few entrepreneurs expect the economy to improve any time soon, as the index's seasonally adjusted level came in at negative-20, down 3 points from November's reading, the report said. Meanwhile, earnings trends had a negative-24 rating, down from negative-23 a month earlier, and expectations for credit conditions came in at negative-7, improving one point.
Owners who are still a little pessimistic about the chances that their companies will prosper in the coming year might want to do more to ensure that they're able to thrive financially in the coming year. This could include shopping around for more affordable small business insurance, as reducing costs for coverage including general liability insurance can save companies as much as a few thousand dollars a year or more.