Small-Business Economic Outlook Negative

America’s small businesses are anxious about the economy and fear a recession is on the horizon. The past year has not been a good one for the small-business economy, and projections for the next 12 months are even less optimistic.

The National Small Business Association (NSBA) released the results of the 2008 NSBA Survey of Small and Mid-Sized Business, reporting on the state of the small-business community and business owner’s opinions on a broad range of topics including economic outlook, employee benefits, financing, energy costs and public policy. In addition to most recent 2008 data, the survey 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,” Todd McCracken, NSBA president stated. “This year, a whopping 71% have a negative outlook on the economy.”

Nearly half of all business owners (45%) expect a recession in the next year, while just 9% say they anticipate economic expansion. Fifty percent (50%) 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%) and lack of available capital (32%) rounding out the top three.

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

More than half (55%) of business owners surveyed 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% report that their credit card terms are worsening.

Spikes in energy costs have negatively impacted 77% of small-business owners. In response to rising costs, 37% of businesses have increased their prices, 33% have reduced their business travel, 11% have cut their production schedule, and 10% have reduced their workforce. On a more positive note, 18% of these companies have taken steps to invest in more energy efficient equipment or upgrades.

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

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