For the last 48 months in a row, the Small Business Optimism Index published by the National Federation of Independent Business has pointed to weak sales as the No. 1 small-business concern. And it’s a good bet that string isn’t over yet.
Another recent NFIB study that examined impediments to growth reveals some interesting findings about what business owners are thinking and planning on the growth and expansion front. Here are some key findings:
• Not all desired growth is “new growth.” While 41 percent want to add employees compared to where they were in 2008, 24 percent simply want to recoup employees lost over the last three years. Another 17 percent have downsized their businesses more or less permanently, though a few in that group want to replace some of the positions lost during the Great Recession.
• Biggest roadblocks are business uncertainty and weak sales. At the same time, business owners say the single most important indicator that would renew their confidence is increased sales. (Still, there are some businesses that say they are doing just fine; about 8 percent see no serious impediments to growth.)
• Plans to introduce new products and services accelerate: In response, business owners are making changes and innovating more. Just over half who say weak demand is holding them back plan to make major changes in how they market their goods and services over the next few years. About 28 percent of that group (19 percent of all the business owners surveyed) plan to introduce a product, service or process that they have created, modified or significantly refined and to promote or license it as an innovation.
• Cash remains king. More than half (53 percent) who think the lack of finance is an impediment also think that internally generated cash flows will be their most important source of financing any new business investments over the next five years. Bank loans will be the second-most common source. However, there’s a problem here. One-third of all business owners who complain of tight credit say that existing debts are “seriously constraining” their ability to finance desired business investment, and another 44 percent say it’s a problem.
• A skilled-employee shortage. Sixty-one percent reporting the lack of skilled employees as an impediment (or 24 percent of all owners surveyed) would hire at least one additional employee right now if they could find people with appropriate skills. More than (9 percent of the population) would employ more than one. •
Daniel Kehrer can be reached at ?firstname.lastname@example.org.