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Tuesday, January 12, 2010

Survey: Small business owners’ outlook improves; concerns remain

Kansas City Business Journal
Kansas City Business Journal - by Kent Bernhard Jr. Contributing Writer
Small business owners are feeling good, better than they’ve felt in more than two years. But that doesn’t mean this group — who own the majority of the nation’s businesses — doesn’t have serious concerns around the margins, think the U.S. economy will return to world dominance or plan to go on hiring binges.
Businesses with five to 499 employees being tracked by the American City Business Journals, the parent company of the Kansas City Business Journal, are more optimistic than they have been since the first half of 2007. Yet shadows fall on that upbeat attitude.
“The highest highlight is optimism is up again. It really is a 12-month high. We really haven’t seen this,” said Godfrey Phillips, ACBJ vice president for research. “But with that optimism is a worry that keeps pervading.”
The survey shows that 75 percent of decision-makers thought at the end of 2009 that their business prospects would be “a lot” or “a little” better in the next 12 months, the best that level has been since the spring and early summer of 2007. And now 40 percent think the economy has turned around, …
So where are the dark clouds?
• The percentage of business owners concerned about the safety of their businesses shot up to 39 percent in December … that could well have something to do with worries about the increased cost of doing business and about the state of the economy.
• The percentage of business owners concerned about the long-term survival of their firms grew to 42 percent … a small move but still an ominous one for those who expect small business to lead the United States out of economic doldrums, as it has in past postwar recessions.
• Sixty-five percent remain concerned about the overall U.S. economy. …
• Slightly more businesses are concerned about the cost of doing business, at 57 percent, …
But with all those negatives, another small-business concern actually could be positive news for the economy. Many more business owners in December … said they were concerned about finding and keeping good employees.
That kind of movement generally is an indicator of good times ahead for the economy as a whole because it means a robust job market is making it harder to find the right employees for small businesses. But … the total employment picture remains a problem. Employers shed 85,000 jobs last month, and the unemployment rate remained at 10 percent, still near a postwar high….
That doesn’t mean there’s no movement in the job market, though.
“I wouldn’t say that we’re seeing a tremendous increase, but we are seeing an increase,” Joanie Ruge, senior vice president at the nation’s largest temporary firm, Adecco, said the day before the latest job numbers were released. …
“The smaller companies … they have to watch their purse strings a little bit tighter,” she said.
Phillips said a fundamental change in hiring is happening. …[A] business owner said: “‘We used to hire three people for one job; now we hire one person for three jobs.’ They expect people to be more productive and be able to do more than one thing.”
And there’s something else significant going on with small businesses, Phillips said. A smaller percentage of them think the nation ever will regain its former economic dominance. …
That may just be the weariness at the end of a long recession talking. Or it may be an insight that the U.S. and global economies have changed, and American businesses will have to tap into new markets beyond a dynamic domestic one if they expect to thrive.
“I think people realize that there’s going to be a little bit of a shift in the power base,” Phillips said. “This great recession, it really has left a scar.”
Kent Bernhard Jr. is news editor of Portfolio.com, an affiliate publication.