According to the small business optimism index measured monthly by the National Federation of Independent Business, small businesses are feeling more optimistic about the economy and the future for the third month in row. This is an important indicator that the United States economy may finally be on its way up.
However, the economy is not going to turn around overnight, at least not according to the current indicators. The optimism seems cautious, and owners are not yet changing their recession survival strategies. A recent survey of small business owners revealed that they are still running relatively lean operations, cutting back sharply on inventory and hiring only the employees that are absolutely necessary. While we are feeling optimistic, we are not ready to put any money on our growth predictions.
An optimism index under 93 indicates weak economy, which is where the numbers have stayed for the thirty-four months since January of 2008. While this index is still under 93, it is above 90 at 91.7, which is a huge improvement. This may signal that the economy is finally turning around and that we have seen the worst.
While optimism is on the rise, sales are staying relatively stagnant. Weak sales and reluctant customers are still forcing small business owners to keep inventories low and costs down as much as possible. Orders made by small businesses remain low, an indicator that owners are not comfortable investing in more stock than they can sell in a very short amount of time. This will have a ‘trickle up’ effect of sorts, as larger manufacturers and importers see their own inventory stagnate from a lack of orders.
Further, average employment growth per small business remained the same in October. While it is comforting that firms are no longer losing ground as they have in the past couple of years, an increase will be needed in order to make a dent in the already high American unemployment rate. The unemployment rate was also unchanged in October, hovering at 9.6 percent.
However, the sun is beginning to peek through the clouds. Private hiring has increased by 159,000, and eight percent of small business owners expressed plans to hire in the near future. Only thirteen percent planned to reduce their number of employees, which is down three percent since the previous month.
Is your business still in recession mode, or are you starting to see the light at the end of the tunnel? All indicators point to an improvement in the economy and an increase in sales in the very near future. While recession strategies may still be necessary to make it through the dark months to come, it is time to make a post-recession plan that will keep you from getting left behind in the coming time of growth. This plan should include new products, a revised business plan, and of course a logo design and brand that will make customers want to jump feet first into the spending behavior they have been neglecting for the past months.
