NSBA: Small businesses anxious about economy 21 April, 2008 By Chris Talbot

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The "2008 NSBA Survey of Small and Mid-Sized Business" report examines the state of the small business community and business owners' opinions on a broad range of topics, including economic outlook, employee benefits, financing, energy costs and public policy. It also compares current results with past NSBA surveys and presents trend data dating from 1993.

"Our survey shows plain and clear how the economic slowdown is affecting small business. When asked last year about their economic outlook, a majority of small business owners responded positively," said Todd McCracken, president of the NSBA, in a statement. "This year, a whopping 71 per cent have a negative outlook on the economy -- clearly small business is feeling the pinch."

According to the survey's results, 45 per cent of small business owners said they expect a recession in the next year, while nine per cent said they anticipate economic expansion. Fifty per cent (50 per cent) cite "economic uncertainty" as one of the most significant challenges they face to the growth and survival of their business, with the cost of health insurance (35 per cent) and lack of available capital (32 per cent) rounding out the top three.

"Small businesses are buckling down, with nearly a quarter reporting no growth strategies planned for the coming year," said Marilyn Landis, chair of the NSBA, in a statement. "Sales and profits are down, and fewer jobs are being created in 2008 than at any period since 1993 when the survey began."

Fifty-five per cent of business owners said they have faced difficulty securing credit over the last year. Credit cards continue to be the largest primary source of financing for small businesses, yet 57 per cent report that their credit card terms are worsening.

Despite the many negatives, including a marked decline in the confidence small-business owners expressed for the outlook of their own business -- down from 81 per cent in 2007 to 70 per cent in 2008 -- the majority still expressed confidence.

"While the '2008 NSBA Small Business Survey' finds that small businesses have a very negative outlook about the economy as a whole, they remain somewhat optimistic about their own prospects," said Glen Bolger, partner and co-founder of Public Opinion Strategies, in a statement. "This tracks closely with what we'd expect to see from self-starting entrepreneurs."

Various factors have had a negatively impact on small businesses. Seventy-seven per cent of small business owners said they have been negatively impacted by spikes in energy costs. In response to rising costs, 37 per cent of businesses have increased their prices, 33 per cent have reduced their business travel, 11 per cent have cut their production schedule, and 10 per cent have reduced their workforce. Eighteen per cent of the small businesses surveyed have taken steps to invest in more energy efficient equipment or upgrades.

When asked about politics, respondents identified reducing the tax burden (40 per cent) as their number one issue in the presidential elections, followed by healthcare costs (32 per cent). While small business owners want the issue of health care to be addressed, 70 per cent reject the idea of an employer mandate, and 66 per cent favor an individual mandate.

The NSBA has made the results of the survey available at at its Web site.