Small-business mood sends mixed signals

January 27th, 2009, 6:00 am · 1 Comment · posted by Jan Norman, small-business columnist

Small-business owners either have split personalities about the economy and their companies or surveys are seriously flawed.

Consider these recent reports:

The optimism of small-business owners, based on 10 economic measures, is near a 35-year low, says the National Federation of Independent Business
“Small business owners are surprisingly positive about the future,” say Microsoft Office Live Small Business and Elance Inc.
After an uptick in December, economic confidence among small-business owners fell back, according to Discover Card’s Small Business Watch. Fifty-one percent said economic conditions for their businesses is getting worse.
Business owners are thinking positively about their priorities in 2009, reports the Wells Fargo/Gallup Small Business Index.
86% of small business owners expect their companies to be in the same or better financial shape in 12 months, according to the UPS Business Monitor from the package shipping company. That December reading was lower than the 91% who were so upbeat in October-November.

Here’s the National Federation of Independent Business Optimism Index going back to 1986. Sure looks like their outlook has taken a nosedive (click on image for larger view):

What’s going on?

These contradictory reports are important because in recent years, small businesses account for half the U.S. gross domestic product and jobs. In California, 52% of the workforce is in for small businesses, says this new report. Small businesses account for a majority of new job growth. If they don’t do well, neither do the rest of us.

Part of the difference may be in what is measured. Those asking “how do you rate the economy” seem to draw decidedly more negative answers than those asking “what do you anticipate for your own business in 2009?”

Hope springs eternal for most small-business owners.

For example, just 8% of the respondents to the Discover survey think the economy is improving. And in the NFIB survey, profit trends hit a record low.

On the other hand, 60% of respondents told the Wells Fargo/Gallup survey that expansion to reach more customers is a high priority for 2009.However, almost half acknowledged they are making contingency plans in case their company’s financial health takes a dive.

These maybe-yes-maybe-no results illustrate just how uncertain the economy is for those on the front lines every day.

Other economy stories…