How confident are small businesses about 2011?

As the year comes to end, something that’s on everyone’s mind is how will small businesses do in 2011? Well, when you have a question like this, it’s best to go straight to the source for you answers, and that’s exactly what Small Business Trends did.

Small Business Trends did a survey of over 1,000 small business decision-makers (owners, partners and general managers) and found them to be overwhelmingly positive about both their own companies, and the economy as a whole. You can see the entire results here.

Nearly three-quarters of small businesses (72 percent) say the overall economy will improve (30 percent) or hold steady (42 percent) in 2011. And when it comes to their own companies, 34 percent expect their sales to rise in 2011, while 50 percent expect them to stay the same. Only 16 percent think their sales will decrease.

This confidence is of course most important in regards to job creation. Twenty-five percent of those surveyed plan to hire employees next year, 64 percent say they will maintain their current staff levels and just 11 percent plan to cut jobs.

So while it appears that we’re still a long way away from completely getting the economy back to where it once was, small business owners generally believe the economy is headed in the right direction. Let’s hope small businesses have the chance to capitalize on this enthusiasm in 2011.

[Small Business Trends]

Small Businesses Continue To Become More Optimistic, Is An Economic Recovery Near?

It’s been a rough few years for small businesses, but as we’ve continuously pointed out here on the blog, optimism has been rising amongst small businesses the past few months. The good news is that it is still continuing.

This morning, the National Federation of Independent Business reported that its November index of small-business optimism rose for the fourth consecutive month to its highest level in three years. The optimism index increased to 93.2, the highest since December 2007, from an October reading of 91.7. Seven of the index’s 10 components rose and three declined. The measure averaged 100.7 during the previous expansion. Needless to say, when you think about everything that has happened in the last three years, this is certainly something to celebrate.

The hope is now that small-business owners may pick up the pace of hiring after the jobless rate reached a seven-month high. With more businesses expecting higher sales, the survey also signals an increase in consumer spending, which accounts for 70 percent of the economy.

The gauge of expectations for better business conditions six months from now rose to the highest level since June 2005, jumping 8 points to 16 percent in November, the report showed.

The good news surrounding this increase in optimism is that banks are also taking note and positioning themselves to assist small businesses. Bank of America, the largest U.S. bank by assets, in October said it plans to hire 1,000 employees in the next year to focus on companies with sales of $3 million or less.

Citigroup, which claims 2,500 of the world’s 3,000 largest corporations as clients, is also targeting U.S. companies with less than $20 million of annual sales. The New York-based bank said it plans to hire about 200 employees by the end of 2011 to court them. That would bring the number of small- business bankers to about 500, or one for every two North American branches.

But what exactly does this optimism mean for hiring? Unfortunately nothing too dramatic right now.

The measure of hiring plans over the next three months rose three points to a net 4 percent, according to the NFIB report. Nine percent of businesses said they intend an increase staff, up one percentage point from November. Fewer indicated they plan to cut payrolls, with 12 percent anticipating workforce reductions, down from 13 percent in October.

Even though optimism continues, the biggest problem for small businesses according to the NFIB report is sales. The sales trends are not yet supportive of a widespread recovery in the small business sector even if a bit stronger than October. Weak sales have continued to be businesses’ top problem, with 30 percent of respondents listing it as their main concern. As a result, the high percent of owners who cite weak sales means that, for many owners, investments in new equipment or new workers are not likely to pay back.

So where does all of this leave us? In a state of cautious optimism. There are positive signs, but also a few signs that temper the excitement. At least the positive trends have remained steady. Provided they do, it looks like we’re in the early stages of a solid recovery.

[Wall Street Journal]

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