Small Business Outlook for 2012: Business as Usual?

As 2011 draws to a close, what are the biggest challenges small business owners are facing? And what is their outlook for the coming year? A new survey conducted by online survey company Zoomerang Online Surveys and Polls and my company, GrowBiz Media, creates a mixed picture.

treading water

Overall, the survey found SMBs in a “holding pattern,” with many seeing little growth this year and planning few changes for the next. However, there’s also some positive news: “Many small businesses are optimistic about 2012 despite economic challenges in 2011,” says Alex Terry, general manager at Zoomerang Online Surveys and Polls.

The survey, SMB Business Perspectives, polled 1,000 decision-makers at small and midsize businesses. Here’s some of what we found:

Biggest Challenges

Overall, the biggest challenge in 2011 for SMBs was growing their customer/client base, with 44 percent of them citing this as their biggest concern. Close behind, budget constraints and customer or client retention were both cited by 32 percent.

Simply “staying in business” was a key challenge for 27 percent of the SMBs, with 20 percent indicating that “local competition” was a major issue.

Less of a concern were communications/marketing/PR, cited by 11 percent, and technological innovation, internal employee retention and internal employee growth, all of which were cited by only 9 percent of the SMBs.

Clearly, small businesses are feeling stiff competition for customers and clients. But with the economy still rocky, they are less worried about keeping their employees on board (which could prove to be a mistake).

Business Performance

How did the SMBs in the survey think their companies fared in 2011? The worries about competition are founded in reality with less than half (44 percent) saying business development held steady this year, and 27 percent reporting losses. Just 14 percent experienced biz dev growth. Overall, most areas of business performance remained the same.

This “holding pattern” is reflected in small business owners’ plans for 2012. Sixty-four percent have no plans to diversify their businesses in 2012; 74 percent did not plan to narrow their business focus. The response suggests that 2012 will be “business as usual” for SMBs still wary of taking too many risks (which also could turn out to be problematic).

Economic Impacts

The economy has “negatively affected” the business of nearly two-thirds (61 percent) of the SMBs this year. One-quarter were not negatively affected (perhaps because they have learned to handle the ups and downs of the last few years), and a lucky 11 percent claim the economy had a positive impact on their businesses..

2012 Outlook

Asked about their outlook for their business’s performance in 2012, SMBs were divided. Forty percent are either “optimistic” or “very optimistic” about the coming year, 32 percent are “neutral” and 28 percent feel either “pessimistic” or “very pessimistic.”

Heading into 2012, SMBs will continue to focus on the challenges that occupied them in 2011. Specifically, their key areas of improvement will be customer/client growth (60 percent) and customer/client retention (38 percent). As a result, the top areas where SMBs plan to spend are marketing (35 percent) and sales (28 percent).

When it comes to innovation and risk-taking, however, the outlook is ho-hum, to say the least. Just 15 percent will focus on technology innovations, a mere 9 percent say geographic expansion is on the horizon, and only 21 percent are even planning to expand their product/service offerings. Nearly one in five (19 percent) say they will make no new investments in their business in 2012.

The lack of innovation troubles me somewhat. I know times have been extra tough, but you cannot grow if you keep treading water. It might be time to dive in and test the waters.

Image from Andrey Burmakin/Shutterstock

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Rieva Lesonsky Rieva Lesonsky is a Columnist for Small Business Trends covering employment, retail trends and women in business. She is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Visit her blog, SmallBizDaily, to get the scoop on business trends and free TrendCast reports.

12 Reactions
  1. I see the same cautious outlook with many of my clients. They’ll keep the belt tight and will only loosen it when they start to see some signs of improvement in the economy.

  2. Great information. I wouldn’t be too concerned about their responses related to innovation. We’ve found that small business owners/manangers consistently way under report their innovation efforts in surveys (there are multiple reasons for this).

    We’ve also found that smallbiz innovation correlates with survey answers related to future expectations. Smallbizs tend to be more innovative if they are optimistic or pessimistic about their future. It’s the neutral folks who tend not to try to innovate.

  3. Lots of hesitancy for 2012! But maybe conditions will improve?? We shall see!

  4. As we have been meeting with small business owners and planning marketing strategies for 2012, I would agree with the survey results. Unfortunately that’s the problem right now. Too much conservatism means that many small businesses will shrink or maintain with little growth once again. Our most successful clients in 2011 didn’t listen to any of this, took risks, expanded services and territory, and became active on Social Media and the web. This market (except for a few declining industries) is ripe for growth! I think most business owners have to get comfortable with the way things are, and that things won’t return to the way they were and go out and work hard for new business. It sure won’t come knocking on your door with the low prices out there and the amount of competition.

  5. I think you’re so tight Ryan. If you want to succeed, it’s all about how you are going to do things, not how you did them.

  6. Steve,
    I can’t find your email. I have something I’d love to ask you.
    Do you have mine?

  7. Here’s two surveys I would put more stock in:

    Pepperdine/D&B study – of 7,500 biz owners:
    Jeffrey Stibel, CEO D&B, “Professor John Paglia’s research strips away all the noise and clutter we hear in the news to tell us why small business owners are not hiring: the answer is access to capital.”


    FDIC/Federal data –
    Bank loans to small businesses under $1million fall to a 12-year low. Even successful businesses find it hard to get credit.

    It’s about Dodd-Frank and access to credit (the 10 largest banks are all bigger than in 2009, with more cash).

  8. Hmm… Interesting article. Since I am leaping to starting my own European accommodation agency with a twist later this year, I am hoping there is a niche for my idea and it can survive the storm.

  9. Here are a few quick things that can increase your business dramatically:

    1. Knowing what the most frequent reasons for not buying are.
    2. A conscious strategy for creating repeat business and referrals
    3. A few irresistible offers to reactivate past clients.
    4. Having a plan and knowing your ultimate strategic position that you want your business to be in.

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