Mid-Year Report: Economic Outlook Remains Bleak

By PlanetLaundry staff | Aug 06, 2010

The National Small Business Association recently released its 2010 Mid-Year Economic Report, which shows small businesses facing the most difficult business climate they’ve faced in the last three years. The report, conducted online June 23 through July 14 among 400 small-business owners, shows 41 percent of small businesses are unable to garner adequate financing. Despite a slight increase in optimism just six months ago, small businesses today report decreases in nearly every indicator including business confidence, revenues, job growth, and growth projections.

“Today, more small businesses are unable to get financing than at any time in the last 17 years,” stated NSBA President Todd McCracken. “Given the direct correlation between access to capital and job growth, unless small-business owners are able to secure financing, we will continue to see high unemployment.”

Few small businesses (11 percent) hired new employees in the last 12 months and the net number of employers who cut jobs was 25 percent. Despite projections for the coming year faring better – a projected net increase of 5 percent – the majority projects no growth in their number of employees.

These traditionally upbeat entrepreneurs have a far-more negative outlook today than they have in the last several years, according to the NSBA report. Nearly half do not believe there will be any growth opportunities for their business in the coming year and well over one-third – 41 percent – have concerns about the ongoing viability of their business. The majority of small-business owners (59 percent) expect the overall U.S. economy to be flat in the coming year, and 29 percent expect a recession.

With regards to policy, confusion over the new health care law plagues a significant majority of small businesses. Additionally, the new 1099 reporting requirements stand to increase the average number of firms for which small businesses must file a 1099 report from an average of 10 to an average of 86.

“Amid all the financial concerns small-business owners face, the fact that Congress would approve this new, massively burdensome 1099 reporting requirement is unfathomable,” stated NSBA Chair Larry Nannis of CPA firm, Levine, Katz, Nannis & Solomon, PC.