A few days ago, the National Federation of Independent Business (NFIB) released their monthly Small Business Optimism Survey, and it ain’t pretty. Not only has optimism among small business owners taken a nose dive, but growth-building activities such as hiring, making capital outlays, and increasing inventory have seemingly slowed down across the board.
For the past few months the NFIB has reported a modest increase in optimism and with it a slow, but positive increase in growth-building activities. So the obvious question over here is: why is this happening, and perhaps more importantly, why now?
It is interesting to note that looking back at the results of the NFIB survey a year ago, some of the key statistics seem to have hardly changed. Namely, the most important business problem cited by survey respondents in June 2011 was poor sales (24%), followed by taxes (20%). This year, the numbers are 23% and 21% respectively. The only significant change was in the third option: government requirements and red tape, which jumped from 15% a year ago to 19%.
Given that most legislative changes on a federal and state level were initiated at the beginning of the year, again the question remains, why the sudden turn about now?
Aside from all the legislative talk that is going on (and has been going on for some time now) regarding health care, taxes, and credit card reform, perhaps this negative attitude can simply be pinned to the fact that many small business owners find themselves battle weary and stuck in a rut. Right now we are in the height of the summer season. It’s a time when the majority of businesses should either experience a typical, seasonal slowdown in sales, or, if they are a seasonal business, they are in the middle of their peak revenue days. We’re also holding in the middle of the year, the furthest point from New Years, when people tend to have a more hopeful and positive outlook.
If sales have not been good and now sales are even slower for seasonal reasons, or if the potentially lucrative summer season is fizzling (all of which are possible given that unemployment has remained stubbornly high while job creation continues to lag), the concerns weighing on a small business owner’s mind can easily become magnified. Taxes and government regulations become more of a problem when there is less money and resources to tax and regulate. Moreover, attitude can significantly dictate the actions being taken.
So, are the NFIB’s survey results really a cry from recession weary small business owners, or are they reacting to other factors? Only time will tell.