A growing number of economists are pulling back from their earlier statements that the economy has bottomed out and is poised to begin its upturn. It seems that small business owners concur.
The National Federation of Independent Business Index of Small Business Optimism lost 1.2 points in March, falling to 86.8. The persistence of index readings below 90 is unprecedented in survey history.
“The March reading is very low and headed in the wrong direction,” said Bill Dunkelberg, NFIB chief economist. “Something isn’t sitting well with small business owners. Poor sales and uncertainty continue to overwhelm any other good news about the economy.”
The index has posted 18 consecutive monthly readings below 90. In March, nine of the 10 Index components fell or were unchanged from February’s not-so-great readings.
Some highlights from the March NFIB survey:
- While actual job reductions may have halted, plans to create new jobs remain weak.
- The frequency of reported capital outlays over the past six months fell to near record low levels. A paltry two percent characterized the current period as a good time to expand
facilities. - Widespread price cutting continued to contribute to reports of lower nominal sales.
- Small business owners continued to liquidate inventories and weak sales trends gave little reason to order new stock.
- Earnings trends declined again in March, with 58 percent reporting that profits are falling.
- Regular borrowers continued to report difficulties in arranging credit.
“What small businesses need most are increased sales, giving them a reason to hire and make capital expenditures and borrow to support those activities,” said Dunkelberg in summarizing this month’s survey results.
Economic recovery on Main Street is looking to be a long, long way off.
Unfortunately, our belts will have to stay tight for a little while longer. But believe it or not, but there is a silver lining to this cloud. These are trying times which disproportionately pressure small businesses in to becoming and staying more efficient. Increased efficiency is frequently accompanied by a reduction of waste which often has a side-effect of environmental benefits.
I run a small AMSOIL motor oil dealership in Monterey CA. We sell primarily to individuals and small businesses. While generally the economy here has been quite poor, I have actually experienced an increase in sales these past months because I have a product which saves my customers time and money by allowing them to safely go three-to-five times as long between oil changes. It’s not a huge sum, but as many have noted, every dollar helps, and those dollars add up over time.
As a side benefit, my customers use less oil, their vehicles are out of commission for maintenance less often (which for small business usually means fewer trips to the Quik-E-Lube). All of that means less pollutants going into the environment.
There are plenty of ways for small business to save money and decrease their ecological footprint in the process. Times like these provide the motivation to do find them.
It turns out there’s something to that old adage, “waste not, want not.”