October 25, 2014

Small Businesses Are Not Affected by the Stock Market

The April 2007 Discover Small Business Watch, a survey of small businesses with five or fewer employees, found that the gyrations of the stock market have little to do with the day-to-day running of a small business.

That’s what the majority of small business owners say. Sixty-eight percent (68%) of those in the Discover survey for April 2007 said changes in the stock market do not have a noticeable impact on their businesses.

Discover Small Business Watch and stock market

That’s not surprising. Small businesses are all about daily realities. Realities such as: How many sales can my business close this week? Can I afford that new CRM system this month? If I hire another person will I be able to make payroll?

The stock market does not enter into these daily realities, for the most part.

A lot of stock market ups and downs are short-term movements. They have more to do with stock traders getting spooked when Humongous Company X misses earnings projections, or when the Asian exchanges are down, or when some other event occurs with a temporary ripple effect.

Most small business owners are not sitting glued to CNBC’s stock ticker thinking, “Hmmm, the market had a bad day, so I’d better wait before buying that new computer.” They know that the market could be down today and reaching record highs next week.

However, the economy as a whole is relevant. Small business owners do, in fact, make decisions based on their impressions of the overall condition of the economy. We’ll take a look at the overall economy and how it impacts small business sentiment in my next post.

3 Comments ▼

Anita Campbell - CEO


Anita Campbell Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of TweakYourBiz.com.

3 Reactions

  1. Although the stock market isn’t an indicator of how I spend money in my business, I sometimes notice that it does play a factor in whether or not a company purchases my services.

    The livelihood of these companies does not depend on the market’s performance. Unfortunately, my contact person, usually the president of a small firm, caves in to thinking the market’s highs and lows will affect them. Strange, but true.

    That’s why diversification is so important to small and solo firms. One small stock market burp can stop an agreement from being signed, so I look elsewhere for revenue I can count on steadily.

  2. Yeah. I agree with the person who posted previously. A small business has to diversify. I know a few small businesses that had their income tied to large corporations that were defintley affected when the market tanked. So, their business suffered as well.

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