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Bill Freehling is a business writer for The Free Lance-Star and Fredericksburg.com. This blog is on Fredericksburg-area business. Send an e-mail to Bill Freehling.
Survey says smaller businesses overstocked in pessimism
OWNERS of small and midsize American businesses are full of doom and gloom about the economy, according to a recent survey.
Five hundred owners of small businesses were surveyed earlier this year by the National Small Business Association. The annual survey began in 1993.
Fewer jobs are being created in 2008 than at any period over the last 15 years, according to the NSBA publication "Advocate."
"America’s small businesses are waving the yellow flag," the article states.
The survey took place Feb. 15-25, a time when U.S. stock markets were off double-digit percentages from four months before.
Although 70 percent of all owners surveyed say they’re confident in the future of their business, the survey results were mostly pessimistic. Among them:
71 percent of the business owners say the economy is worse today than five years ago.
45 percent expect a recession in the next year, while an equal number expect a flat economy. Just 9 percent anticipate economic expansion.
The outlook of business owners for the next 12 months is less optimistic that at any point since 1993.
In the 2000 survey, 51 percent of companies surveyed were offering a health benefit. This figure dropped to 41 percent in 2007, and to a low of 38 percent in 2008.
55 percent of business owners surveyed said they have faced difficulty securing credit over the last year. But 70 percent said they are able to obtain adequate financing.
Asked to name the issue that’s most important to them in the presidential election, 40 percent said reducing the tax burden. Next most important was health care costs.
77 percent of owners say rising energy prices have had a negative effect on their business. 33 percent have reduced their business travel, and 10 percent have reduced their work force. About 18 percent have invested in more energy-efficient equipment.
So what does this mean for investors? As usual, that’s hard to say.
On one hand, business owners know best about how much money is coming in. If it’s down, that doesn’t bode well for the overall economy or market returns.
On the other hand, the markets may have already priced in much of the doom and gloom that’s pervading the economy these days. In that respect this could be an opportunity to buy while others are fearful.