National survey shows slight slip in entrepreneur confidence

Small business owners are increasingly wary of the slowing economy, but they aren't hitting the panic button, a new quarterly Small Business Insight survey shows.

The July survey reports a slight increase in the number of small businesses planning to trim their workforce over the next six months. The survey's general index of small business attitudes dipped to 127 from 130. A score of 100 or higher is considered positive.

Overall, most small business owners remain optimistic, with 77 percent expressing positive views about their own company's immediate future. Nearly one in five small businesses plan to add employees over the next six months.

Only 5 percent said they expect to trim staff, up from 1 percent three months ago. About 36 percent expect to make capital expenditures during the next six months, barely changed from the previous quarter.

The poll of 499 owners of businesses with fewer than 100 employees took place in mid-July for The Network of City Business Journals, a subsidiary of Nashville Business Journal's parent company, American City Business Journals. It was conducted by International Communications Research, of Media, Pa., from a business database maintained by InfoUSA. ACBJ operates 41 local business newspapers throughout the country.

"We are still seeing the resiliency that sets small businesses apart," says survey director Bill Madway, research director of ACBJ. "They are noting what's going on with the economy, but they are retaining their optimism and not going into a shell."

Unlike large firms, most small businesses haven't been affected by weak international business conditions, notes Lynn Reaser, chief economist at Banc of America Capital Management in St. Louis.

"The slowdown in the U.S. economy has been heavily concentrated in technology and manufacturing," she says. "Other sectors have slowed, but they are not experiencing a downturn of a similar magnitude."

Nearly one in five respondents cited weaker economic conditions as the biggest problem facing their companies, up from 12 percent only three months earlier. And 32 percent now rate their regional economy as weak, up from 23 percent in the previous quarter.

Economic concerns now rank as the second biggest concern among small business owners, up from sixth in the previous survey.

"The bad news from the economy has continued for a long time, since last October," Madway notes. "After awhile, it takes its toll. So I think we're seeing some trimming back, but nothing like a total collapse."

Despite the slowdown, the lack of qualified employees and related work force issues remains the top concern of small business owners. Work force issues are particularly pronounced in the South, where one of three owners cited the issue as their biggest challenge.

One consistent survey finding is that owners are confident of their own prospects. Fifty-four percent rate their company's financial condition as strong, up from 51 percent three months earlier. Meanwhile, 15 percent rate their condition as weak, up from 12 percent.

That optimism is comparable to recent studies of consumer confidence, which show most workers are nervous about the economy but believe their own jobs are safe, Reaser notes.

"Generally small businesses are a stabilizing force in the economy because they don't tend to become complacent or bloated," she says.

Reader Comments

• More News Headlines
• Popular News Stories