Why You Shouldn’t Care About Small Business Pessimism

Sure, Congress is ineffective, the Fed can’t help you, and optimism is still weak. But there are plenty of reasons to feel good about being a small business owner.

By Eric Markowitz |  @EricMarkowitz   | Nov 8, 2011

At first glance, today’s small business optimism index released by the National Federation of Independent Businesses might make you a little depressed: More than a quarter of small businesses indicated that sales were lower this month than last, and borrowing activity is at a 38-year low. And the index, pegged at 90.2, is only a few measly points higher than it was in January 2009, when the economy bottomed out.

And if you’re expecting Uncle Sam to swoop in and save the day, NFIB chief economist Bill Dunkelberg says don’t hold your breath.

“As for help from Washington, the Federal Reserve is “out of bullets” and Congress is completely ineffective,” Dunkelberg said in a statement.  “Fiscal policy is in disarray and all that is proposed is higher spending and more regulations and higher taxes to support it. Not the type of incentives that help stimulate economic growth.”

So, feeling good yet? You should.

Sales may have flatlined in recent months, but the future may not be so bleak. The National Retail Federation is expecting a 2.8 percent increase in holiday sales this year, while trade associations like ShopperTrak and IBIS World predicted a 3 percent increase. A recent Purdue University survey sees that number jumping to 4 percent.

If sales numbers don’t sway you, just take a look at the recent job numbers as a marker of optimism.  In October, about half of all job gains reported by ADP—pegged at about 110,000—came from small businesses, while larger firms, on the other hand, have consistently scaled back on their payrolls. The NFIB also found that a net of 3 percent of small business owners plan to create new jobs in the next three months—”the strongest reading for 2011 to date.” And a study released last week from researchhers at Pepperdine University found that though confidence among small business owners had dipped significantly since last Spring, almost half of the surveyed businesses said they plan to hire more employees in the next six months.

And SurePayroll Small Business Scorecard, which measures payroll data of 35,000 small businesses across the country, found its own confidence index surge 20 percentage points in October—one of the biggest raises in recent memory.

“Typically entrepreneurs don’t let the so-called “state of the union” hold them down,” says Michael Alter, the president of SurePayroll.  ”When things get tough, they knuckle down and find a way to turn the negatives in their favor. They’re in it for the long haul and they know that the long haul sometimes requires faith and a fight.”

And it isn’t just American entrepreneurs that are feeling more confident these days, either. Our northern neighbors in Canada are starting to see the light as well.

“More business owners are saying their recent performance has been better than at any time since the recession began,” says Ted Mallett, the chief of economist of the Canadian Federation of Independent Business (CFIB), in a statement. In fact, the CFIB saw its own index jump a few percentage points in October. “After falling back significantly in August and September, amid economic uncertainty, business owners seem to have restored at least some of their capital spending plans,” he added.

Speaking of capital spending, it’s also worth adding that small businesses are starting to view financing as a relatively insignificant barrier to entry. According to the NFIB report, just 4 percent of business owners grieved over finding access to capital, and the amount of small businesses that plan to increase capital outlays rose a whopping 21 percent since September.

And, contrary to Dunkelberg’s dire assertion, Washington may yet assist small business owners with access to capital. There are currently four bills entering Congress in the coming weeks that are meant to make it easier for small business to get cash. They include the Private Company Flexibility and Growth Act, the Access to Capital for Job Creators Act, the Entrepreneur Access to Capital Act, and H.R. 1965, which seeks to de-regulate small banks’ ability to lend.

So while the NFIB reported just a ‘minor uptick’ in confidence, the big picture results are hardly glum. We’re curious how you feel, though. Let us know in the comments section below how confident you are these days, and what you would like to see happen in Washington that might make you see the glass half full.

Source: http://www.inc.com/articles/201111/why-you-shouldnt-care-about-small-business-pessimism.html