One-third of small business owners report the uncertain economy as the biggest challenge they face in growing their businesses— the largest number in the seven-year history of the American Express OPEN Small Business Monitor, a semi-annual survey of business owners. One-quarter of business owners are challenged by the rising costs of doing business.
Economic challenges coupled with rising energy costs appear to have caused a shift in entrepreneurs' outlook on near-term business prospects and priorities, the survey says. Compared to last fall, optimism is down significantly (48 percent vs. 64 percent), but has remained steady compared to six months ago (45 percent). Cash flow concerns have risen year over year, capital investment plans are at their lowest in the history of the Monitor and the number of business owners offering healthcare benefits to employees is also lower.
"The economic news of the last several weeks is shaking every business owner's view of the economy," said Susan Sobbott, president American Express OPEN. "Entrepreneurs are nimble and have strategies in place to manage business challenges. They are decreasing investments, adjusting expansion plans to capital on-hand, cutting expenses and focusing on adapting to customer demand.”
Three-quarters of business owners plan to grow their businesses over the next six months, but keeping and maintaining current business and sources of revenue has surpassed growth as the top priority for entrepreneurs. To help retain their current sources of business, entrepreneurs will place a heightened focus on better servicing customers to set their business apart from competitors.
The survey was conducted by Echo Research August 12-25, and released this month prior to federal action on the credit crunch. The economy is cited by nearly four in 10 small business owners (38 percent) as the issue that will most sway their decision on the next president of the United States, followed at a distance by tax policy (cited by 18 percent). The study evaluated retail, service and manufacturing sectors.
Business owners in the services sector are among the most optimistic (53 percent) and most likely to have hiring plans (44 percent), but least likely to have plans for growth. The biggest business challenge they face is the uncertain economy. Given their reliance on consumer spending, it is no surprise that retailers are least optimistic (48 percent) among these business sectors, the report said. Concerns detailed include cash flow problems, rising costs, economic uncertainty and healthcare costs.