The National Small Business Association reports that small-business owner confidence is down and that it could have a negative impact on future hiring and market presence. Nearly half of the owners surveyed feel there will be no growth in their business in the next year, and 88% are expecting another recession. This lack of confidence notwithstanding, owners also indicated trouble securing financing and increasing credit rates as causes of limited growth. Even so, hiring appeared to be edging up in the small business sector despite complaints of rising costs in health care that usually slows hiring. For more on this continue reading the following article from The Street.
Small-business owners have diminishing confidence in the economy and in their own firms, according to the National Small Business Association’s midyear economic report.
This is despite bright spots including hiring growth and indications of future small-business hiring, the association says.
According to the report, released Wednesday, 88% of small-business owners anticipate a flat or recessionary economy in the coming year, the highest that figure’s been in two years.
"This negative economic outlook is causing a growing lack of confidence among small-business owners," NSBA President Todd McCracken said in a statement.
Approximately 45% of small businesses — compared with 40% back in December — do not expect growth opportunities in the coming year, the report says. This is partially due to the inability to access adequate financing (36% are unable to get a loan, a 13% increase from December). Another 19% pay credit card interest rates of 20% or higher, according to the report.
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Small businesses also held off on hiring due to the rising cost of health care. Small businesses also ranked reducing the national deficit, reducing their tax burden and reining in the costs of health care and regulatory reform as top priorities.
"Nearly one in three small-business owners named the growing U.S. debt the No. 1 challenge facing their business," according to Larry Nannis, chairman of the NSBA.
Sentiment may be down, but hiring seems to be on the uptick. Small businesses reported modest gains in employment resulting in the "lowest net decrease in employment in three years," the report says. The number of small businesses planning to hire employees in the coming 12 months also increased.
According to the latest Automatic Data Processing jobs report, released Wednesday, 114,000 jobs were added in July, slightly higher than experts predicted, and came despite job losses in manufacturing and the goods-producing sector.
What’s notable is that it was small businesses providing the majority of jobs in July.
Of that figure, 58,000 were from private-sector small businesses. Small businesses actually created 61,000 jobs in July in the service-producing sector, but lost 3,000 jobs in the goods-producing sector, according to ADP.
ADP considers small businesses as those firms with fewer than 50 employees.
Small businesses showed "positive job growth for the 20th straight month, averaging 69,000 jobs a month for the past year," ADP Chief Executive Gary Butler said in a statement.
Businesses with fewer than 20 employees created 50,000 jobs in the four-week period beginning June 24, according to the Intuit Small Business Employment Index, released Monday. The number was roughly the same as the June hiring period, Intuit said.
This article was republished with permission from The Street.