Recent Kauffman Survey Shows Mixed Results

After months of encouraging jobs reports, the number of new jobs to come online in March of 2012 plummeted. This is just one example of how difficult the nation’s economy is to navigate since the 2008 and 2009 crisis.

In a recent report released by the Marion Kauffman Foundation, the largest foundation dedicated to small business and entrepreneurial advocacy, it is clear that the economy still has small business owners confused and apprehensive.

According to the April report, nearly one third of entrepreneurs have plans to hire additional staff sometime in 2012. This represents a 5 percent increase over the January survey. But although business owners plan to hire, 27 percent believe that consumer demand will decrease this year. This was up two percentage points from 25 percent.

In another data point, 63 percent of respondents believe that the economy will improve or stay the same, a number that dropped by 3 percent yet the number of people who believe that the economy will “improve significantly climbed by 2 percent.

Finally, 82 percent of respondents believe that their businesses will be more profitable for the next 12 months than they are today. This represents only a 1 percent increase from the 81 percent found on the January survey.

This survey, conducted by Legalzoom, the nation’s largest online provider of legal document services, is not considered a scientific survey since it only surveyed 876 people but it has proven to be a reliable gauge of small business sentiment.  Because it is a quarterly survey it takes in to account current market conditions including the recent rise in gas and oil prices.

The same survey reported a 6 percent drop in the amount of people working from home which seems to indicate a confidence in both their business and the overall economy that led them to seek office space outside of the home.

Bottom Line

Surveying of small business owners has become increasingly popular in the past four years since the economy collapsed. It’s largely believed that gauging the health of the small business community is a strong indication of the health of the overall economy.

Because of this, the amount of surveys has increased and seem to report conflicting results. It’s important to remember that small business sentiment changes rapidly due to the small size of most business and their inability to weather a significant economic downturn.

Looking at all of the surveys collectively, there seems to be an indication that the economy is in an uptrend if looked at over the course of years rather than quarters.