Citibank: Small business cautiously optimistic

February 24, 2011

Small business owners are showing increased confidence in the economic recovery, but they’re still not willing to pull the trigger on hiring new workers, according to a new survey by Citibank.

“Optimism is definitely up,” said Raj Seshadri, who heads Citi’s small business banking division. “We’re not out of the woods. They’re worried about costs, particularly the cost of healthcare, the cost of raw materials – how they’re going to manage through the increasing cost of running their business.”

The majority of owners said they believe 2011 will be better (44 percent) or the same (42 percent) than 2010, while just 15 percent expect it to be worse, according to the poll. It included a random sample of 1,002 small businesses throughout the country with revenue in excess of $100,000.

Even so, 78 percent of those surveyed are not yet ready to increase staffing levels, holding out for improved sales in a competitive environment where most are resistant to boosting the prices of their goods and services.

“The bottom line is that sales have to recover,” Seshadri said. “Then they’ll be more comfortable thinking about expansion plans as opposed to maintenance plans.”

Despite the cautious optimism, the overwhelming majority of small business owners – some 73 percent – said they would start their business again, despite broader challenges in the economy. Some 64 percent said they would recommend entrepreneurship as a career choice for their kids, up from 59 percent in September.

“These guys are fundamentally passionate about small business ownership,”  Seshadri said.

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