SMB Confidence Up, Spending And Hiring Still Flat - InformationWeek

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SMB Confidence Up, Spending And Hiring Still Flat

A new survey of local merchants finds that most see the economy holding steady in the doldrums and widespread caution about hiring or spending.

A new survey of local merchants finds that most see the economy holding steady in the doldrums and widespread caution about hiring or spending.The results of a new survey indicate that most local business owners view the economy as the same of slightly better than it was a year ago. MerchantCircle, a social network for local business owners, conducted the second MerchantCircle Confidence Index survey. Of the almost 12,000 local merchants the participated in the February survey 7 out of 10 indicated the economy today is "the same or better than it has been over the last 12 months." That consistent view of the economy belies that lack of growth and opportunity many business owners see right now and echoes the tepid findings of the Discover Small Business Watch released last week.

Commenting on the results of the survey, Darren Waddell, MerchantCircle vice president of marketing, took a more optimistic view of the findings. He said, "Our data reflects that local businesses are reluctant to respond with increased spending on marketing and hiring. We are encouraged though to see that revenue expectations are up, and that more than a quarter of our merchants saw increased holiday sales over 2008. Many of these signs point toward a healthier small business environment in 2010, and we're hopeful the macro economic climate can support that direction."

Though business owners may see signs of hope in the general economy and in sales projects, uncertainty still rules the day based on these findings from the survey:

  • 27.8% said the economy today was somewhat or significantly improved compared to the past 12 months
  • 30.7% said it was about the same
  • 22.6% said it was weaker
  • 18.9% said it was much weaker
  • Almost 50% expected somewhat or significant improvements in sales revenue in the next 90 days (up 10% from November 2009)
  • 44.7% believe the worst is yet to come when asked about the effects of the recession
  • 24% believe the worst is now past

Uncertainty and halfhearted confidence about the economic outlook dictate hiring projections (not government stimulus) and marketing spending as these results show:

  • 17.1% of small businesses expect to increase headcount in the next 90 days
  • 11.5% expect to reduce headcount
  • 46.3% expect their marketing spend to remain flat for the next 90 days
  • 29.2% anticipate an increase
  • 24.5% expect the trim marketing spend

Access to credit remains an issue for SMBs as these results confirm:

  • 58.8% saying credit availability has worsened in the last 90 days
  • 36.7% indicating it is unchanged
  • 4.6% believe it has improved

Proving that just like politics, all business is local, the survey revealed geographic differences in the outlook for business owners, particularly for local merchants in California and Texas.

  • 30.7% of California merchants believe the economy is better now than over the past 12 months
  • 29.3% in Texas believe it has improved
  • 27.8% of all business owners nationally believe it has improved
  • 20.2% of Texas merchants expect to hire in the next 90 days compared to 17.1% nationally
  • 53.9% of Texas merchants expect somewhat or significant improvements in sales revenue in the next 90 days compared to 50% nationally

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