The vast majority of small business owners (86 percent) are concerned that the economy may experience a double-dip recession, according to the latest Citibank small business survey. At the same time, 75 percent of survey respondents say they are very or somewhat prepared for another downturn, signaling that many entrepreneurs have adjusted their businesses and finances to get through any additional economic stumbles.

According to the survey, 68 percent of business owners say they have changed the way they run their business – with 64 percent indicating the way they do business has forever changed. Among the adjustments, respondents cited debt reduction (42 percent), increasing cash reserves (40 percent), hiring freezes (34 percent) and delaying plans for expansion (32 percent). When asked what factors allowed them to weather the recession, small business owners listed long-term client base/relationships (62 percent), effectively managing expenses (57 percent), and recession-proof products or services (35 percent).

“Small businesses continue to feel the effects of today’s uncertain business environment,” said Raj Seshadri, the head of Small Business Banking at Citibank. “Yet we are encouraged to see businesses adjusting to the economic environment and preparing for additional challenges – so they are ready to expand and grow when conditions improve.”

To improve or grow their business this year, business owners say they plan to work longer hours themselves (61 percent), increase marketing (48 percent), and increase employee productivity/get by with fewer employees (44 percent).

Realistic but Passionate

Mirroring findings of previous surveys, a majority of small business owners (76 percent) rate current business conditions as only fair or poor, and only 28 percent diagnosed their business as better off today than a year ago. Additionally, while 42 percent say they expect their business to improve in 12 months, 58 percent believe conditions will worsen or remain about the same.

Respondents cited higher taxes (48 percent), declining demand for their products and services (43 percent), tighter business regulations (40 percent), and the cost of health insurance (40 percent) as the primary challenges to running their business today.

Yet despite the challenging outlook, small business owners’ passion for their work continues to shine through in Citibank’s survey.

Eighty-one percent of small business owners say they like or love running their own business, and 75 percent say they would start their business again even if they knew then what they know now about the challenges they would face, up 4 percentage points from the previous survey, conducted in March. Additionally, 59 percent said they would recommend entrepreneurship as a career to their children.

“No matter what the economy throws at them, business owners remain passionate about their business and resolute about their choice of career,” added Seshadri. “Our survey continues to reveal the unique spirit, passion and commitment that entrepreneurs bring to their businesses and the communities they serve.”

Small business hiring plans remain tepid, with 83 percent of business owners planning to reduce (7 percent) or keep the same number of employees (76 percent) in the next 12 months. Small business owners say they would increase hiring if they experienced an increase in sales; yet nine in 10 say they would need to see sales increase for at least two quarters in a row before hiring new employees. Other hiring drivers for small business owners include more certainty that the economy is recovering (53 percent) and a reduction in payroll taxes (41 percent).