In a new survey from NFIB just released this morning, small businesses have expressed their pessimism over where the economy is headed. Since they now generate 50% of the GDP, their concerns deserve our attention.
Small business owners’ plans to create jobs and plans to spend on capital have significantly declined. While this is prudent for their long-term survival, as it protects their cash position in a possible economic downturn or recession, it will hurt economic growth in the short run. Small business has been the job creation engine and has been particularly strong in capital spending over the past few years of the current (or should I say, most recent) expansion.
It is clear this is a proactive move on the part of small business owners to slow commitments to new jobs and new equipment, as they are reporting that their profits are still strong. Although there are positive signs that this will not be a very long down turn, at least for now small business is seeing the glass half empty.
Dr Jeff Cornwall
Co-founder of The Entrepreneurial Mind, serial entrepreneur and professor of entrepreneurship.
Good analogy with the glass of water. It is all about being optimistic or optimistic. Some enthusiastic small business owners still view the glass half full. Hopefully, this optimism works. I remember running my own ghostwriting agency some years ago and I had to strain every nerve not to go bankrupt.
Can you really blame them? Our country is still at war, North Korea is popping off long-range missiles, and we are still foiling terrorism efforts on our own soil. Following 9/11 many small businesses struggled and/or closed due to the lull in the econcomy. Conservative investments in human resources and capital eqiupment is not unreasonable in a time of policitcal and economical uncertainty. It is not a matter of half full or half empty–sometimes you just need to appreciate having something in your cup! I don’t blame them for savoring it!!
As an employee of a small business, I completely understand where the small business owners are coming from. At the beginning of the year, we had intended to hire an additional full-time staff person but due to the economic downturn we decided not to fill that position. It is tough for small businesses because any small change could cause them to go out of business.
I tend to agree with the small business owners. Maybe I need some therapy for my pessimism, but I don’t have that warm and fuzzy feeling about our economy either. I work for a small business and to make matters worse it is a construction company. So when a recession hits, it hits me first. Currently, we are struggling to find enough jobs to even bid. Our project lists continue to dwindle. This has greatly effected our decisions in hiring and acquisition of new equipment.
It really starts to make sense when you realize that more people are drinking out of the same cup. Interest rates are rising and margins decrease, healthcare benfits for employees, taxes ~ small business owners are just looking for ways to prevent any leaks!
Heath and Chris are correct: Whether your work for a small business or a large one, you have to be acutely aware that we are about twenty cents a gallon away from an economic downturn. Nobody has seriously addressed the energy costs that are strapping the average US consumer. But, the good news is that some crazy entrepreneur somewhere is right now designing a solution that will completely upend the current structure. If I worked for a big auto or energy firm, I’d be worried that there’s an energy or transportation Google out there somewhere, about to change the world as we know it.