Study: Small Business Owners to Lead Economic Recovery

By PlanetLaundry staff | Nov 04, 2009

Looking out 12 to 24 months, small business owners say their companies will emerge from the recession strong and well positioned for growth over the next two years – leading the U.S. to economic recovery, according to a comprehensive new study, “The Guardian Life Index: What Matters Most to America’s Small Business Owners.”

Even in the face of the significant challenges of the economic downturn, the fundamental optimism demonstrated by small business owners is the result of their passionate, confident focus on three core pillars of business success – their customers, their employees and their own self-dependence, according to the study, which was commissioned by the Guardian Life Small Business Research Institute and fielded in May 2009. Based on a 21-point scale (from +10 to -10), it measured the positive and negative intensity of responses to a vast battery of issues, providing an in-depth understanding of what matters most to the small business owners who in aggregate build and sustain some 20 million individual small businesses that collectively account for 50 percent of U.S. gross domestic product and 44 percent of the nation’s payroll.

“Small business owners are the backbone of the U.S. economy,” said K. Rone Baldwin, executive vice president and chief operating officer, Guardian Life Insurance Company of America. “Their deep, intensely personal focus on customers and employees, coupled with their strong self-reliance and determination bode well for a national economic recovery.”

In the study, customers are small business owners’ number-one concern. Exemplifying small business owners’ deep commitment to customer satisfaction and loyalty are their very positive responses to: “Having customers who appreciate what I do” (5.8), “keeping the customers I have from leaving” (5.6) and “making my customers into friends” (3.9). Positive intensity numbers above three are highly significant, according to the researcher who designed the methodology and conducted the study, John Krubski.

Small business owners are similarly passionate about their employees. At an intensity level of 5.5, “my employees” ranks nearly as high as customers in importance. Other evidence of the deep commitment small business owners have to their employees is illustrated by their positive responses: “Giving my employees reasons to feel good about being part of our team” (4.3) and “helping others to have income and opportunities” (3.9). At the opposite end of the scale are issues that matter least. Even slightly negative numbers indicate strong passions, according to Krubski. In the study, small business owners reacted very negatively to “cutting back on employee benefits” (-0.1), “reducing the number of employees” (-0.2) or “moving full-time employees to part-time schedules” (-0.9).

Finally, the third pillar for what matters most to small business owners is their personal freedom and independence, as these positive intensity metrics underscore: “personal freedom” (5.3), “being able to make my own decisions” (4.9) and “doing something for a living that I love to do” (4.2).

Contrasting the metrics associated with customers, employees and self, small business owners’ feelings about financial matters are about half as intense: “being able to add significantly to my retirement funds” (2.5), “making enough money to pay my family’s personal expenses” (2.4) and “being able to pay myself as much as I should” (2.3).

“By closely concentrating on the needs of customers, employees and themselves, small business owners have a clear sense of priority for their time and effort,” said Mark Wolf, director of the Guardian Life Small Business Research Institute. “Skillfully balancing these three vital dimensions ultimately enables small business owners to realize their financial goals and achieve long-term success.”

Overall, 92 percent of small business owners expressed optimism about their enterprises, with 54 percent expecting to maintain business as usual and 38 percent confidently looking forward to expanding their businesses over the next 12 to 24 months.

From a regional perspective, the South has the highest percentage of owners (62 percent) who project stable or increased revenues for 2009, followed by the Northeast (61 percent), the Midwest (59 percent) and the West (56 percent). Texas is the state with the highest percentage of owners (69 percent) who project stable or increased revenues for 2009. That optimism contrasts with California (51 percent), New York (49 percent) and Florida (49 percent).