Current economic conditions may be improving, but some have questioned whether they will be all that conducive to small business success, and it seems those concerns are now echoed by owners of these companies themselves going forward.
Overall, many company owners were actually slightly less hopeful at the end of August for future success than they were a month earlier, with the National Federation’s of Independent Business’ Small Business Optimism Index declining 0.1 points to a level of 94. However, it should be noted that the only reason it held anywhere near steady was that expectations of higher sales numbers and the increased ability to hire within the next 12 months took significant steps forwards, even if earning trends moved even more significantly downward.
Plans to increase employment rose 7 percent from August, while expectations of companies’ real sales to rise jumped 8 percent, the report said. Earnings trends, though, slumped 13 percent. All seven of the optimism index’s other conditions had changes that were more moderate, though there were fewer relative lowlights. For instance, both expectations for the whole economy to improve and the total number of businesses which say they have current job openings dipped 4 percent each, largely offsetting gains in plans to increase inventories (3 percent) and plans to make capital outlays and expected credit conditions (up 2 percent apiece).
“August in Washington was typical – nothing got done, and therefore nothing changed the outlook of small-business owners who have the same list of concerns today that they had in January, April and July,” said NFIB chief economist Bill Dunkelberg. “But we saw some interesting things happening with the Index this month. The August reading provided us with a rather perplexing set of statistics; internally consistent on some dimensions, such as lower sales bringing lower profits, but contradictory in other ways, such as lower job openings but huge gains in hiring plans. We know that the upcoming implementation deadlines for the healthcare law are weighing on the minds of employers, and the current dim prospects for real tax reform must be, as well. The September survey will hopefully straighten things but with Syria on the horizon, the budget situation still up in the air, and Obamacare being rolled out, clarity over our economic direction is not likely to be the outcome.”
Many major concerns remain unchanged
Much of the reason that small business owners might feel a little worse about their chances for success going forward is that the problems which they’ve been concerned with have not changed, the report said. Among the items listed as the “single most important small business problems” plaguing them last month, taxes remained at No. 1 with 23 percent of all small business owners citing it. That number was both unchanged from this time last year and down from the all-time high of 32 percent. Likewise, government requirements and red tape were not far behind on the list of major concerns, with 21 percent noting it’s their biggest issue, also unchanged from the same time in 2012. Finally, worries about poor sales rounded out the top three, but stood at 17 percent, down from 20 percent 12 months earlier.
Owners worried about their success may want to look into ways they can reduce their costs overall, and that can include slashing small business insurance expenses. Finding more affordable coverage for policies including workers’ compensation and liability insurance may help to ensure that companies have the added flexibility they need going forward, even in these current uncertain economic times.