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05 07 2013

05 07 2013

Small Businesses Optimistic Amid Consumer Spending Gains

Small business owners showed a growing sense of optimism in regard to their future business prospects in a recent survey conducted by Insperity. The encouraging responses were even voiced, despite persistent concerns involving government policies and healthcare costs.

Optimism, consumer spending grows

Of the small businesses that participated in the survey, 74 percent of respondents said that they are either meeting or exceeding their 2013 performance plans, up from 71 percent who said the same in a similar survey conducted in late 2012; additionally, 40 percent of respondents plan to hire new employees and 59 percent expect sales to increase during 2013.  Employees also benefited from the stronger business performance, as compensation has increased 3.7 percent year-over-year.

“Business owners are slowly beginning to implement business plans that they hope will take advantage of any coming economic opportunities,” said Paul Sarvadi, Insperity​’s chairman and CEO. “However, as in the previous survey, a significant number of respondents express continuing concerns about the negative impact of governmental policies on business activity.”

Despite general skepticism among small business owners about the state of the economy, 40 percent said they were uncertain when an economic recovery would take place, their sentiment was buoyed by better-than-expected consumer spending.

According to the U.S. Department of Commerce, consumer spending exceeded expectations in March, climbing 0.2 percent. After adjusting for inflation, the increase registers even higher at 0.3 percent. The growth comes as a surprise to economists who, in a recent poll by Reuters, thought spending would remain flat.

“This makes it much more likely than we thought for real consumer spending to post a solid gain in the second quarter and increases the chances that real GDP growth in the second quarter will come in above 2 percent,” John Ryding, chief economist at RDQ Economics, told Reuters.

When it comes to adding profits, 67 percent of respondents to the Insperity poll said improving service to existing clients was their leading strategy, and 66 percent cited new accounts. With improved consumer spending, now may be the time for many small businesses to borrow or lease updated equipment to improve their services and products to bolster sales.

Alternative lenders, such as National Funding, provide working capital loans and merchant cash advances to businesses that are optimistic about their future growth, but may not meet the strict lending requirements of a bank or have the initial cash on hand to make those investments.

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