Business owners are feeling less optimistic about the economy than they were just six months ago, according to the first-ever State of Small Business Report from the Pepperdine Private Capital Markets Project (PPCMP). Overall, business owners’ confidence has dropped 34 percent from Spring 2011 to Fall 2011. And entrepreneurs are also pessimistic about the economy as a whole: Only 29 percent expect an improvement in business conditions over the next 12 months. (On the plus side, that number is still slightly higher than the 25 percent who expect a continued decline.)
But as many other surveys have shown, pessimism about the overall economy doesn’t always translate into negativity about one’s own business. More than half (59 percent) of respondents believed that opportunities for their businesses would increase either slightly or significantly in the next 12 months.
Perhaps that’s why almost half (44 percent) of small business owners in the survey say they plan to hire in the next 12 months. What types of employees are they hiring? For 47.8 percent it’s workers with sales and marketing skills; 41.6 percent said their biggest priority is skilled labor; and 38.8 percent are looking for employees who have customer service skills. Employers aren’t totally confident of finding employees who have the skills they need—82 percent expected they would need to provide training to new employees.
Of the small businesses that don’t plan to hire in the next 12 months, the key reasons were economic uncertainty (49 percent), weak consumer demand (30 percent), government regulations and taxes (23 percent) and lack of access to capital (23 percent).
Speaking of capital access, of the respondents who had tried to raise capital in the past 12 months, 35 percent applied for bank loans and only half of those were successful. However, of the 16 percent of respondents who approached friends and family for funding, 79 percent were successful.
Asked what measures they thought would most likely stimulate job creation, 34 percent of small businesses in the study said increased access to capital would help, and 24 percent said tax incentives would create jobs.
A continued political stalemate and the potential for a European debt fallout are likely driving business pessimism, said Dr. John Paglia, lead researcher of the Pepperdine Private Capital Markets Project and associate professor of finance at Pepperdine Universitys Graziadio School of Business and Management. Even with profound uncertainty small businesses are looking to hire.”
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