Small Business Exhibiting Confidence

LANSING — A recent survey of small business owners in Michigan reflects a positive look at the future.

The Small Business Association of Michigan (SBAM) Small Business Barometer survey found a ray of sunshine in the clouds of economic uncertainty. In its ninth year, the Barometer looked at 200 small businesses and found that in many cases the positive numbers outweighed the negative.

The survey reported that 30 percent of small business owners said that in the next quarter plans to increase investment are positive. This is the highest number reported in over a year.

“This has also, historically, been the best indicator of what a small business owner plans to do,” said Michael Rogers, vice president of communications for SBAM.

“When we go back we look at what small business owners say they plan to do for the next quarter, whether it is employment or whether they expect sales to increase or decrease, that when we go back later and find out what they actually did, we find that investments was pretty much right on. If they said they planned to increase investments they pretty much did that, so I think we feel optimistic that that is a really good indication that the small business community is starting to turn around a little bit.”

Taking into consideration that all businesses surveyed, from manufacturing to retail, were members of SBAM, Rogers said the polling company that performs the survey adjusted the results to reflect the position of the entire small business community.

Unfortunately the sample size was too small to break it down regionally in order to receive accurate results, and the results didn’t break it down into specific sectors of small business, but Rogers stated that the barometer has historically been a very accurate reading of future intentions.

“We are surveying again late this month and a new report will be out the first of the year to receive fourth quarter happenings and predictions for next year,” Rogers said.

The barometer also indicated that sales increases outnumbered reports of sales decreases for a second consecutive quarter, after nearly two years in which decreases exceeded increases.

In addition small business owners reported few problems accessing credit.

On the other hand, only 20 percent of small business owners say they had increases in profitability in the last quarter, compared to 23 percent in the previous survey. And reports of recent increases in capital investment declined from 21 percent to 12 percent while reports of decreases in capital investment rose from 11 percent to 14 percent.

“The investment activity was at the lowest in the nine years we have been doing the barometer,” added Rogers. “So things were really slow in the summer and there were not many conclusive statements looking forward.”

Very few small businesses reported an increase in employee hiring.

Looking ahead, Rogers noted, there is a lot of anecdotal evidence SBAM received from meeting with board members, conversations with individual board members and conversations with members.

“Keeping in mind that we have a wide variety of people from manufacturers to retailers to professional people like accountants, I think there is a lack of pessimism,” Rogers said. “I am not sure I want to go out on a limb and say real optimism but I think there is less pessimism.”

A few factors he feels play into that is the fact that the election is over and that releases some uncertainty, small business owners are also looking for some resolution of the situation in Iraq.

“I go back again to the fact that the highest numbers in over a year say that they are planning to increase investment. That is a good forward looking economic indicator because they are putting their money where their intentions are,” said Rogers.

“They are feeling less pessimistic enough that they are actually going to start investing some money and that may also be a reflection that interest rates are historically low. And it is easier for them to tap into money and put it into their businesses.”