Small Business Concerns Grow about Economy, Revenue Expectations and Hiring

IPA SBRB Study: Small Business Optimism Wanes; Concerns Grow about Economy, Revenue Expectations and Hiring

BUFFALO GROVE, IL (November 9, 2005) – As the end of 2005 approaches, small businesses are more wary of the future as a yearlong trend away from optimism continues, according to a new study from the International Profit Associates Small Business Research Board (IPA SBRB).

Confidence in the general economy has eroded. Just 26% of those surveyed say they expect the economy to improve over the next twelve months. This compares to 53% who said the economy would improve at the beginning of the year and 43% who thought the economy would improve in an IPA SBRB survey in July.

Conversely, the number of those businesses saying the economy would be worse over the next twelve months has increased four-fold during the year. In the current study, 39% of the small business owners and managers surveyed said the economy would be worse during the next year. This compares to 10% who felt this way at the beginning of 2005.

Small business revenue expectations reflect these feelings. In the current study, 48% of those surveyed say their revenues will increase for the year. This compares to 71% who thought their revenue would increase in the IPA SBRB survey in January.

The number of small businesses who say they will increase hiring has declined continually throughout 2005. At the beginning of the year, 42% said they would increase the size of their staff. This dropped to 36% in April, 29% in July and 20% in the current survey.

Uncertainty also is playing a role in hiring decisions with 22% of those in the current survey saying they were unsure of their future hiring plans, more than three times greater than any other 2005 IPA SBRB survey.

Finding quality employees is apparently also weighing on the minds of small business owners. Among those who participated in the current survey, this is now established as the single most important issue impacting small business beyond general economic concerns. Fifteen percent of those surveyed say that finding quality employees was their single most important issue.

"Small business is worried about the outlook for the economy and their businesses, "said Gregg Steinberg, President of International Profit Associates, the largest privately-held provider of management consulting and professional services to small and medium-size businesses in North America. "With a wide range of growing concerns, business owners and entrepreneurs must take stock of how they are managing their businesses. Those that are not currently controlling and maximizing every aspect of their business may be in for a very daunting ride."

The International Profit Associates Small Business Research Board ascertains and reports the opinions of small business owners and managers on a wide variety of topics related to their own businesses as well as national and international issues that may impact their operations.

Participants in the poll provide feedback on significant issues and allow for real-time insight into the state of small businesses nationwide. The universe of participants is developed from among small businesses across the United States. A total of 325 small business owners and senior managers participated in this IPA SBRB poll. The IPA SBRB study is a voluntary survey conducted via phone and email. The poll was structured and supervised through an independent resource.