The latest survey by American Express OPEN Small Business Monitor reports similar results to the NFIB survey I wrote about earlier this month. Like the NFIB survey, this one also found entrepreneurs to be somewhat more optimistic, but still very cautious.
Entrepreneurship can be stressful enough during good times, but during tough times we see that the uncertainty and struggles resulting from managing the finances of a small business during the recession are taking its toll:
- More than half (55%) of entrepreneurs have an optimistic outlook on near-term business prospects, up from 45% in March 2009. Keep in mind that this is a sample of small business owner still in business. Like I said earlier, who wouldn't be a bit more optimistic if they have survived the rash of small business closings over the past few months!
- However, only one quarter (26%) report expanding opportunities for their business
- Six in ten (63%) do not think the worst of the U.S. economic woes are over -- I agree!
- Nearly one in six (17%) say they risk going out of business in the next six months because of the economy.
- They're most likely to hire (36%, vs. 25% of Gen X and 20% of Boomers )
- They're most likely to have capital investment plans (58%, vs. 41% of Gen X and 39% of Boomers)
- They're most willing to take a financial risk (67%, vs. 52% of Gen X and 47% of Boomers)
- They're least likely to have cash flow issues (53% versus 59% for Gen X and 64% of Baby Boomers)
- They're least stressed out by the economy (57% versus 72% of Gen X'ers and 71% of Boomers)
- They're most likely to implement employee-friendly policies to battle the recession. Gen Y will allow employees to maintain a flexible schedule (44%), Baby Boomers will institute a hiring freeze (41%) and Gen X entrepreneurs will institute a salary freeze (39%)
Entrepreneurship can be stressful enough during good times, but during tough times we see that the uncertainty and struggles resulting from managing the finances of a small business during the recession are taking its toll:
- Nearly seven in ten entrepreneurs (68%) are "stressed out" by the economy and three in ten (31%) say that the current economy has caused them to question their decision to become an entrepreneur.
- 60% of those surveys are experiencing cash flow issues. The biggest cash flow worry for business owners is the ability to pay bills on time (26%). When cash flow concerns arise, business owners are most likely to dip into their own pockets: 32% of business owners will use personal or private funds, and one in four (25%) will put off purchases. Others will use credit or charge cards (13%), obtain and use a line of credit (12%), lease rather than purchase business equipment (4%), or get a short-term loan in order to improve cash flow (3%).
- Nearly half of entrepreneurs (45%) are looking to access capital from external sources in order to run their businesses. One out of five business owners (19%) say they are experiencing difficulty accessing capital. To secure the funds they need, business owners are tapping a variety of sources, including using a bank loan (14%), using business or personal credit cards (each 13%), tapping personal savings (10%), borrowing from a friend or family member (3%), and private equity/venture capital or home equity (each 2%).
- Concentrating on current customers. Forty-one percent of small business owners say their top priority over the next six months is maintaining current sources of revenue. By comparison, only one quarter (26%) say they are focused on growing their business, which is the lowest number for growth in Monitor history.
- Avoiding risk. Half (49%) say they are not willing to take on financial risk to grow their business, an all-time high for the Monitor.
Leave a comment