Uncertainty seems to be the word of the moment. Whether it is about recession and recovery, the elections, federal policies on taxes and healthcare (etc.), uncertainty seems to have caused many businesses, particularly SMBs, to remain in a holding pattern when it comes to investing in their businesses. The future of SMB business expansion and growth continues to be on the edge.
The latest topic of uncertainty is the Ben Bernanake-popularized term “fiscal cliff,” a series of tax increases and government spending reductions that are set to take effect in 2013. Many believe this “cliff” will lead to another recession. According to the 2013 Capital Markets Report from Pepperdine University, more than half of the business owners surveyed were “very concerned” or “extremely concerned” about the “fiscal cliff.”
At The Receivables Exchange, we’ve heard numerous complaints from small business owners that the likelihood of the country's budget worsening is unraveling confidence, hurting orders and delaying payments, to name just a few. Expecting their tax rates to rise, many business owners are looking at cutting payroll and other expenses – rather than creating jobs, which has traditionally powered economic recovery. In fact, 57 percent of business owners surveyed by Pepperdine say the top reason preventing them from hiring is economic uncertainty/confidence.
Small business owners surveyed by Vistage International Inc. and The Wall Street Journal shared similar sentiments. Of the 740 business owners polled 43% anticipate conditions over the next 12 months to worsen. In fact, 16% of owners reported they were already planning to reduce staff in the new year.
Entrepreneurs and SMBs have always been a driving force behind our economic health. While these businesses will continue to keep themselves going, uncertainty often prevents them from making aggressive investments to expand their business and grow their revenue – actions that often necessitate hiring.
John Paglia, director of Pepperdine’s Graziadio School of Business and Management, predicted that if the fiscal cliff situation is resolved quickly it would incent small businesses to hire, pursue financing to grow their businesses, and in general, ease those worries of uncertainty that are holding many private business owners back.
Wanting to understand what will motivate you as a small business owner to hire in 2013 and get the economy moving, The Receivables Exchange recently released its own survey the “SMB Optimism Index”. We invite all SMB business owners who want to share their thoughts about where their business is heading in 2013 to take the survey. And stay tuned over the coming months we’ll be sharing the results.