Why small biz optimism is up

Small-business owners are more optimistic about their growth and earnings prospects now than at any time since 2006. According to the National Federation of Independent Business, which has tracked business owner optimism for decades, American small businesses may finally be shaking off the effects of the Great Recession.
In particular, a bigger chunk of business owners expects higher earnings in 2015. “This could be a breakout year for small business,” said Bill Dunkelberg, NFIB chief economist.
While business-owner optimism has been trending up for a while, the signs of a significant and sustainable upswing were thin – until now. The NFIB’s latest survey from December 2014 reported positive small-business momentum in eight of the 10 categories tracked by the survey, including increases in hiring, spending and expected earnings. One category was unchanged and the single category that dropped had experienced a big jump earlier, so a decline was not surprising.
Areas where businesses expect to see or make the biggest changes this year include capital investments, hiring, sales and expansion. For the past six or seven years, only a few business owners considered expansion a good idea. But that’s now changed dramatically.
About 54 percent of business owners surveyed say they are either hiring or trying to hire – but 43 percent say they are having trouble finding enough qualified candidates. About one in every four businesses reported having at least one job opening they could not fill in the most recent quarter. And about 14 percent say they are using temp workers to fill some of the gaps.
To attract and keep employees, business owners are paying more, with about 25 percent reporting higher compensation in the latest quarter.
Meanwhile, sales prospects are looking up. More businesses are reporting higher sales and fewer are reporting that weak sales are a problem. In fact, the number complaining of weak sales has dropped to its lowest level since 2007. In short, customers really have started to show up again – the best thing that can happen to a small-business owner. Small firms are also in a spending mood themselves, with about 60 percent reporting capital investments in the latest quarter. Of those making capital outlays, 42 percent bought new equipment, 23 percent bought vehicles and 16 percent improved or expanded facilities. Another 6 percent acquired buildings or land for expansion, and 12 percent spent money on new fixtures and furniture. •

Daniel Kehrer can be reached at editor@bizbest.com.