Small Business Owners More Optimistic Than Expected in December

Each month the Small Business Authority Market Sentiment Survey conducts a survey gauging the overall feeling of small business owners around the country. 1,000 small business owners are surveyed at the beginning of each month asking questions about their views on the economy. Asking somebody how they feel might seem largely unscientific but the sentiment of business owners directly affects how they function in the economy so their feelings are actually quite important.

The survey found that 55 percent of small business owners believed that 2012 would be better than 2011 and 64 percent believe that their end of year figures would be better than they once believed. Only 20 percent were pessimistic about 2012 and 25% were neutral. These numbers don’t speak to a nation of business owners without worry but it represents a large step forward in optimism.

Why the Optimism?

First, the November jobs numbers which were released on the first Friday of January, saw the unemployment rate shrink to 8.7% signaling that businesses are once again hiring. With the December jobs report seeing a further decline to 8.5%, this is great news for the millions of small business owners nationwide who are looking for a signs of a sustainable, long term recovery.

Second, results from Black Friday and early December indicated a stronger than expected holiday shopping season. That sentiment may have softened slightly with larger retailers like Target releasing worse than expected numbers but data points for the holiday season still appear to indicate better than expected sales.

In another interesting data point, 68% of small business owners now believe that selling more rather than cutting costs will be the easier way to grow their business. This appears to indicate that business owners feel more comfortable relying on a stronger economy than they have in the past.

What if?

While sentiment has improved, experts warn that it wouldn’t take much to reverse these positive results. If the European economy gets worse or continued geopolitical concerns cause oil to rise in price, business owners will likely go back to a more defensive mode. Nobody has forgotten the crippling effect of the past three years and the slightest downturn could seriously depress the progress made.

Finally…

If you’re an entrepreneur hoping to open your business in the near future, now is still a perfect time, according to investment advisers. The risk of an economic meltdown is much less than in the past but real estate still remains a bargain and credit markets are again opening for potential business owners.