NSBA: small businesses slightly more optimistic about own business, not U.S.

WASHINGTON – The small business community is feeling slightly more optimistic about the outlook of their own business, despite a continued negative outlook about the overall U.S. economy, according to the year-end economic report released by the National Small Business Association last week.

Accessing credit and creating jobs continue to be ongoing challenges for small business owners, the NSBA said.

“The most recent survey data shows small businesses have stopped the hemorrhaging in some key indicators, including job and revenue cuts,” the 2010 Year-End Economic Report said, while flagging “modest” gains in employment - 15 percent said they had hired new employees in the past 12 months, up from 11 percent in July.

Although there was no change in small business owners’ opinions of how the economy is faring today as compared to six months ago, there was a marked drop – 13 percent in December from 29 percent in July - in those anticipating a recession in the next 12 months, the NSBA said. The number of respondents expecting to see an economic expansion nearly doubled to 22 percent in December from 13 percent in July.

The organization flagged economic uncertainty, declines in customer spending and health insurance costs as concerns for small business owners. The group also thinks the U.S. Congress top priorities should be: reducing the national deficit, reducing tax burdens, reigning in the cost of health care reform, reducing regulatory burden and increasing small-businesses access to capital.

For the first time since the 2008 mid-year economic report, a majority, 54 percent, said they expect to increase revenue in the coming 12 months; 19 percent projected declines and 27 percent said they didn’t expect any change.

“Since 1993, small businesses have projected net increases in both revenues and profits, and today, both indicators are back on track after two years of net decreases,” the entity said.

When asked about future growth strategies, the top three responses were: new advertising and marketing strategies, 42 percent, expanded Internet presence and e-commerce, 34 percent, and strategic alliances, 24 percent.

“Unfortunately, ‘no growth strategies planned’ tied for third at 24 percent,” the NSBA pointed out. The organization also highlighted that the percentage of small business owners that project no change in employment, 64 percent, was at its highest point since February 2008.

“Given the historic role small business has played in job creation, this stagnation underscores the strong need to support small business growth and ensure impediments, such as an inability to finance growth, are removed,” it said.

More small business owners expressed confusion over the health care reform law in the year-end report than they did six months earlier. In the December report, only 15 percent of small businesses said they have a “clear understanding” of how the new law will affect their business, down from 21 percent in July. Eight-five percent said they have “limited” or “no understanding” of how their business will be affected.

The 14-page year-end report - which covers a wide range of issues affecting small business owners, including financing, credit cards, exports, taxes and more - is one of two annual NSBA economic reports conducted in December and July. The December survey was completed online by 450 small-business members of the organization from Dec. 20, 2010, through Jan. 10, 2011.