Small Talk: Not out of the woods yet

February 16, 2010

These days everybody is talking about a financial recovery, but a new Wells Fargo and Gallup study shows small business owners remain skittish.

Even with the recent positive news that the jobless rate had dropped from 10 to 9.7 percent, the study – conducted on January 22 – showed virtually no change in small business optimism from the last report in October.

The Wells Fargo/Gallup Small Business Index optimism score came in at -16, which was down one point from October 2009 and reflects an overall negative outlook by small business owners on their companies. A zero score would indicate that small business owners have a neutral opinion about their outlook.

The report is compiled from telephone interviews with 605 U.S. small business owners and the results are tabulated from a formula that scores and sums the answers to 12 questions – six about the present situation and six about the future. Respondents were asked about their financial situation, cash flow, revenues, capital allocation spending, job hiring and credit availability.

Even last month’s U.S. Commerce Department report that showed 2009 fourth quarter Gross Domestic Product grew at the fastest pace in six years, was not enough to brighten the spirits of small business owners, of which 42 percent said their cash flow was somewhat poor or very poor for the last 12 months, up from 36 percent during the last quarter.

The news wasn’t all bad, as the Wells Fargo poll showed 48 percent of business owners expect an increase in revenue in the next year, up from 42 percent and 24 percent expect their spending to increase in 2010, compared to 19 percent during Q4 2009.

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Home Improvements/Small Cabinet Operation Outlook, February 16, 2010

I own a small business. I am a one-man operation with an occasional helper. Although I remain hopeful, I don’t look for that hope to come soon for many small business owners, category specific, including myself.

In the residential industry, new homes suffered the most. I have experienced numerous calls from other one-man ops pros, with gloomy voices, looking for just an opportunity. A number of these callers were reliant mostly on the new homes construction industry. Some of these callers have maintained, although roughly, by finding small projects or part-time work.

The negative thing about it is some of these individuals do not display a significant level of entrepreneurial spirit, if any, as reported by customer surveys, both written and verbal. More and more I see that other bidders do not know how to price their projects. The estimation range is all across the board. Whereas a cabinet maker has several costs to cover even before wages and profit, newbies and desperate heads of family just trying to make ends meet do not seem to know or understand the rules. Again category specific, there is a potential for destroying the integrity of the industry.

I am not one to sit around and do nothing. I have had to scale back from a shop to garage, cut paid advertising and learn free methods of generating clientele, of which there are some good ones out there.

I have also learned that lead services, although good hearted in nature, have capitalized on the desperation selling the same leads to three or more professionals for the same price. Many of those leads have ended up being price shoppers and looky loos who take their information to the big companies who can deliver at price match with discount. I just can’t figure out how a company can lay carpet in one day at $97 for the whole house without somehow taking advantage of the customers in one way and another.

Ryan M. Bruzan
http://www.littlethings.biz

Posted by rmbru2k | Report as abusive

Thanks!! very helpful post!

Small Business Loan Central
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Posted by sunnysbt | Report as abusive