Last week, the results of an online survey of small business owners were released which indicated that owners of small businesses appear to be optimistic about the new year.
With such bleak economic tidings over the past few years, a find like this is certainly welcomed news. But is it real?
Few would deny the physiological and financial impact the current economic downturn has had on American consumers. Though there may be some pent up desire to spend, for now anyway, it's being directed toward discount bins, markdowns, and "value" promotions. Consumers these days are more cautious, and given the continued economic uncertainty, it is a caution that doesn't look like it's going anywhere anytime soon.
Moreover, it has been reported that the biggest challenges currently facing small businesses have been an overall reduction in sales volume and a subsequent cash flow crunch that has paralysed business operations and stunted growth.
With this in mind, a closer look at results of the aforementioned 2011 Small Business Outlook survey suddenly paint a not-so-rosey picture:
- Approximately 70 percent of small business owners believe that the economy will either stay the same or get worse. Given the current economic difficulties summarised above, this statistic is suddenly not so encouraging.
- Two thirds of small businesses believe that sales will either stay the same or decrease. A further question: How many of the small business owners who believe that sales will stay the same are currently experiencing lacklustre sales?
- A full three fourths of small business owners are expecting be in maintenance mode or bracing for a downsizing. Even though a quarter of businesses say they plan on hiring, it may be a drop in the bucket compared to the overwhelming resistance to hiring among many businesses big and small.
Bottom line: though there may be a degree of cautious optimism out there, for the most part, it may just be wishful thinking.