New survey finds that 75% of small business owners say economy is “much worse” than it was five years ago
July 23, 2009
SBAM’s national affiliate, the National Small Business Association (NSBA) today released the 2009 Mid-Year Economic Report. The report illustrates a small-business community barely hanging on in the midst of the worst economic downturn since the Great Depression. According to the report, 94 percent of small businesses surveyed said the national economy today is worse off than five years ago, and those who think the economy is doing much worse jumped from 64 percent in December 2008 to 75 percent in July 2009. (photo by timetrax23)
Although there was a slight increase in the number of small businesses who are anticipating economic growth, and a decrease in those anticipating a recession in the coming 12 months, these changes are more likely a reflection of the dismal position in which many entrepreneurs find themselves today, and the feeling that they’ve hit the bottom with no place to go but up.
“Nearly half of small businesses, up from a third six months ago, are not confident about the future of their own business,” stated NSBA President Todd O. McCracken. “The ongoing erosion of confidence from traditionally up-beat entrepreneurs is a wakeup call to lawmakers that small business may not be able to tread water much longer.”
The report details the ongoing difficulty small businesses are facing as three key indicators—revenues, profits and employee size—all declined between December 2008 and July 2009. The number of small businesses hiring new employees in the past 12 months dropped from 18 percent in December to just nine percent in July. Revenues and profits took an even bigger hit with the majority (62 percent) experiencing a decrease in revenues, and even more (66 percent) reporting a decrease in profits. The one positive: small businesses projected less drastic decreases in job growth for the coming 12 months.
Access to capital continues to be a major issue, with 80 percent of small-business owners negatively impacted by the credit crunch—up from 67 percent one year ago. Sixty-eight percent reported worsening terms on their credit cards and 38 percent were subject to a decrease on their lines of credit or credit cards. There was, however, an increase in the number of small-business owners who used a traditional bank loan in the last 12 months. While a positive indicator that bank loans are an option for some small businesses, this increase also reflects the fact that more businesses are turning to outside sources of financing as the difficult economy has forced them to use up business savings and earnings—making access to affordable capital all the more important.
“We’re struggling. Despite several economic stimulus packages and lots of talk, only three percent of small businesses reported a positive impact of the stimulus bills on their business,” stated Keith Ashmus, NSBA Chair and co-founding partner at Frantz Ward LLP, Cleveland, Ohio. “America’s small businesses need and deserve better.”
The full report can be accessed on-line here.