Small Business, Split Personality

There isn’t just one description of the current economic condition for all small businesses today.

Some are thriving and hiring new employees, adding locations, and venturing into new activities. One restaurant owner is working with a suburban municipality near me to open a second location and hopes to have the red tape behind him for an opening by January 2013!

Others, however, are hanging on by a thread, trying to survive until sales picks up. Another restaurant owner in the same county is in the process of moving into a new line of business and is trying to sell his place; he’s tired of the struggle.

How are you coping in this economy?

The NFIB Small Business Optimism Index last month declined for the fifth straight month. The report on optimism for August should be out this week.

Key findings for July include:

• 11% expect to reduce their workforce over the next three months
• Sales are trending downward for many businesses
• Capital outlays are expected to be weak for most businesses

Still, the report shows growth for some businesses:

• 10% expect to hire new employees
• 29% reported higher sales
• 20% expect to make capital outlays within the next six months

What does this duality mean for the small business community? Now that Congress is back from its summer vacation, there is sure to be considerable discussion about what to do to help grease the wheels of this economy.

Unfortunately, with the split in the community, there may not be a unitary voice about what should be done to better the lot of small business. Some businesses might appreciate government assistance in some form, including government-sponsored programs that they can benefit from. Most, however, would agree that government is part of the problem, not the solution. Taxes, regulations, and the general uncertainty that government has created by its discord, has contributed to the plight of the economy in general, and small business in particular.

From my perspective, politics should take a back seat to doing what government can do to help, which is primarily to get out of the way and let the marketplace get back to normal. Micro-initiatives that last a short time and benefit just a segment of the economy, such as last year’s cash for clunkers, don’t work in the long run.

Whether businesses are prospering or suffering, all could benefit from lower taxes on all levels of government and fewer regulations. Let’s hope politicians see the light.