Small business optimism is a hot topic and it’s something that many are trying to measure. One thing that’s near certain is that small businesses are survivors and by default optimistic, at least the ones we’ve interacted with over the years. In our most recent survey, we found that micro and very small business optimism was very high – specifically meaning those polled think they will make the same or more money than they did in the previous year. They also believed that small businesses as a whole will help lead the US out of the current economic climate. But what does optimism really equate to on the whole and more importantly, how does it impact the overall economy?
While we found that the majority of micro businesses were optimistic and planned on making more money this year, over 70% of them didn’t plan on hiring anyone – either part or full-time – in 2011. While this is to be somewhat expected with businesses this size -many of them sole proprietorships – it begs the question does optimism coincide with employment and growth then ultimately have a broader impact on the economy as a whole? Or can small and micro businesses have an impact simply by spending to expand their businesses outside of employing others?
Intuit’s monthly small business employment index recently cited a .03 percent growth in employment amongst small businesses with less than 20 employees, which would translate to a 4% growth rate for the entire year. A recent ADP survey also indicated small business hiring was trending up, but that small businesses had shed three million jobs over the past three years. Meanwhile, the National Federation of Independent Businesses also released results for January that said small business optimism rose 1.5 points in January but was “blunted by small business owners’ skepticism about the future and continued hesitancy to spend and hire.” Oftentimes it seems optimism is being equated with hiring amongst small businesses, which isn’t necessarily the case.
For our survey, it appeared optimism meant two things: small businesses were willing to continue to stay in business (and continue making money) for 2010 and also spend money to expand their business in 2011. These two things alone are going to spur economic growth, especially when considering the sheer number of micro businesses in the US alone (25 million.) Optimism did not equate to hiring of employees, which is an important distinction. But as we’ve found on a daily basis in interacting with micro business customers, they are almost always optimistic. That’s why they went out on their own to start their own venture in the first place. They think they can make it work, they want to follow their passion and they want to work hard to make whatever dream they have a success.
Our data was encouraging in that it appears small and micro businesses feel that on the whole, things are turning around and they can spend more to expand (and specifically market) their business. Let’s hope that that optimism continues and that spending continues to spur economic growth. What about you, are you optimistic about your business in 2011? And what does that optimism mean specifically?
Share your thoughts in the comments section.