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Despite Lower Sales, Small Business Owners Optimistic

Despite Lower Sales, Small Business Owners Optimistic

New surveys reveal that small businesses have been struggling but are hopeful for improved business in the future. While the recent Senate deal may have ended the partial federal shutdown, the legislation has only postponed reaching a budget decision for a few months. Even so, many small businesses expect to see a light at the end of the tunnel, with a majority optimistic for the next 12 months.

Since the recession, small business sales increased impressively and growth has remained steady. According to Sageworks, revenue at companies with annual sales below $10 million increased by 8 percent in 2010 and 2011. This year, however, the pace is slipping. So far in 2013, growth is at only 2 percent, suggesting that many small businesses have not achieved the levels they hoped for so far this year.

Consistent with this trend, only 32 percent of small businesses have seen an increase in sales in the past six months, according to Capital One’s Spark Small Business Barometer. Many small businesses find themselves in a rut, with the culprit being poor economic conditions. In the same survey, fifty-two percent rated current business conditions fair to poor. When asked what long term challenges they face, 29 percent – the largest proportion – indicated the economy was the most important. Nineteen percent said healthcare costs were their biggest challenge and 15 percent said government regulations.

The drama over the federal budget could be the cause of pessimism in the economy. In the National Federation of Independent Businesses’ October report, Chief Economist Bill Dunkelberg cited botched healthcare implementation and “manufactured crises” related to budget talks as a cause of concern.

“Prospects for politicians and policymakers ‘getting it right’ are low, and job creators are rolling their eyes and shaking their heads thinking, ‘This is certainly not the way to run the largest enterprise in the world’,” he explained, adding that small business owners are likely to “remain pessimistic, accepting the notion that growth is going to be sub-par and that their government is likely to continue in dysfunctional mode for months to come.”

But despite the grim outlook, small businesses appear to be optimistic about the long-term.

Future growth

Fifty-two percent of business owners are optimistic about the national economy over the next 12 months, according to the Capital One survey. This is an eight-point increase over the national economic outlook reported during the previous quarter. Forty-six percent of firms expect their financial situation to improve over the next six months, which is a nine-point improvement compared to the same time last year.

Small business owners anticipate growth, but the continued budget debate could mean things get worse before they get better. Businesses bracing themselves should consider getting a small business loan to offset losses and invest in improvements that will boost their sales. National Funding provides speedy and hassle-free loans. During the times that banks and federal lenders have failed to offer assistance, National Funding has continued to provide a needed service to small businesses.

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