Why Small Business Owners are Turning Pessimistic
According to a recent survey, the glass is half empty for small business owners across the country when it comes to conditions on Main Street.
A Wells Fargo survey shows a 17 percent decline in small business owners that expect to be in good financial standing over the next year. That number has dropped to 59 percent. Additionally, those expecting an increase in sales dropped to 43 percent.
“Business owners have a lot of unknowns in front of them today,” Doug Case, Wells Fargo’s small business segment manager, said in a statement. “In the survey, businesses said they’ll be more likely to invest in their businesses when they see improvements in their operating environment, and better sales and revenues.”
Only 41 percent of small business owners surveyed said they planned to make capital investments over the next 12 months, as concerns about the future of the economy continue to linger.
It’s not just an unstable economy that has small business owners on edge.
Big Banks Aren’t Approving Small Business Loans
Securing capital to grow their business has been a struggle for the past decade. A recent Bank of America survey showed that 54 percent of small business owners say credit availability is a top concern.
One way to dampen those concerns is find a small business-friendly bank. More times than often, that’s the bank in your community.
In 2011, community banks approved more than 55 percent of small business applications. Community banks have a much better idea on how your small business will operate in the community and if it’s worth the risk. Small business loans aren’t worth the time to big banks, resulting in less than 12 percent of small business loans being approved by those banks in 2011.
Are small business owners actually pessimistic?
SurePayroll released its own survey just one week before the Wells Fargo report. The results showed a different result.
According to the survey, 70 percent of small business owners and entrepreneurs remain upbeat about their business and would actually encourage other budding-entrepreneurs to jump into the business world.
“Small business owners are optimistic by nature and they know that if you have a good idea you can take advantage of the lower costs in this economy and be successful,” Michael Alter, president and CEO of SurePayroll, said in a statement. “Still, we need more incentives for investors to back startups and less tax burdens on small businesses.”
Politics can be blamed for drop in optimism.
Congress is still working on a tax deal that could greatly impact small businesses. They have until Jan. 1, 2013. As a result, small business owners say they are nervous to hire workers because they aren’t sure about the future tax implications.
“Once we get past the election and the Fiscal Cliff, the clouds will be removed and people will be able to plan,” Mark Vintner, senior economist at Wells Fargo, told CBS News.
So while the economy is improving, it’s still not up to par. What’s the fog of uncertainty clears, expect more growth in the small business community.
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