Things still look pretty gloomy for small business owners says the recent Discover Small Business Watch index. According to the report, there was a brief rebound in December, but economic confidence among small business owners dipped in January back down to 71.4, the same as October 2008 but not as low as prior months. Here are some of the key findings.
- Only 19 percent of owners say they plan to increase spending on business development over the next six months, the lowest number for this category in the Watch’s 30-month history. Forty-six percent say they plan to reduce spending on business development and 30 percent are not making any changes.
What a big mistake those 46% who are reducing their spending are making. Business development is what drives small business sales and ultimately adds to the bottom line. The 19% who are increasing spending and those who are not making changes truly understand how important business development is to their business survival.
- The number of owners who say they have experienced temporary cash flow issues in the past 90 days decreased in January to 38 percent from 42 percent in December.
This is very good news. That means these small business owners have likely found a creative way to get their cash flow issues in line so they can keep their head above water.
What I also find encouraging is that 53% of owners said they will not have to raise funds to stay in business, while 32% said they will need extra money and 15% weren’t sure. And it’s a good thing that’s the case because the banks just are not letting loose of those purse strings just yet. I think we’ll be waiting a few more months before bank funds are available again.
Interestingly, of those who indicated they would need extra money, only 18% would seek a bank loan. Most will look to friends and family (20%) and some will tap into their personal savings (19%). I’m also glad to see that only 9% will use credit cards for financing. In tight cash flow situations, credit cards are a quick road to nowhere.
What do you think of these results? Are they in line with your thinking? Let’s talk about it.
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About the Author: Denise O’Berry is a small business expert who provides tools, tips and advice to help small business owners be successful. O’Berry is the author of “Small Business Cash Flow: Strategies for Making Your Business a Financial Success.” Her blog can be found at Just for Small Business.