“Our study found that a surprisingly high percentage of small business owners are more optimistic about 2010 after having survived the worst of the recession,” notes Chris Reilly, President of CIT Small Business Lending. “Many believe that the survival strategies they’ve implemented and hard lessons they’ve learned have better positioned them for growth this year.”
Greater Optimism for Growth in 2010, Despite a Challenging Environment
A majority of the small business owners surveyed indicate greater optimism about their 2010 growth prospects, with 60% of respondents expecting their companies to grow (53%) or grow significantly (7%) this year. Less than a third (28%) expect their revenues to be flat and just 12% anticipate a decline. At the same time, small business owners are still feeling the pressure of the current economic environment, with 71% agreeing that they are working harder and longer than ever before, and nearly a third (29%) indicating that the recession has made them doubt their commitment to running a small business.
Small businesses also believe they will play a key role in the U.S. economic recovery, but in spite of, rather than assisted by, support from the federal government. Nine out of 10 respondents agreed that current stimulus has not provided any benefits. Still, small business owners remain hopeful that Washington will take action to help them, particularly in the area of financing. Fifty-eight percent agreed that higher Small Business Administration (SBA) loan limits would benefit small businesses.
“Many small businesses expect to fare better this year than last, but the current environment is still a challenging one, mainly due to lack of available financing,” Reilly continued. “This is why CIT has allocated up to $500 million in funding for small businesses in 2010, and has waived the packaging fee on all new loan applications through March 10. It's also why we strongly support the Small Business Job Creation and Access to Capital Act of 2009 and the Obama Administration’s recently announced plan to make $30 billion available for small business loans.”
Taking Action to Improve 2010 Business Performance
CIT’s study also reveals that a majority of small business leaders (64%) intend to be more aggressive in 2010 by implementing a range of actions to advance their businesses. A full 59% of respondents cited a greater focus on operating efficiencies as the number one step to achieving growth in 2010. At the same time, 62% plan to invest more in marketing and advertising, while 50% will invest in expansion and 46% will pursue new revenue streams.
Stuart Feil, Editorial Director of Forbes Insights, said, “A significant number of small business owners are taking strategic steps to improve efficiencies and diversify revenue streams so their businesses can achieve an even stronger upswing as their markets recover. Seventy-eight percent of respondents acknowledged that the old way of doing business will no longer work and that they need to find new ways to take advantage of market opportunities. This explains why many are planning to be more aggressive with their marketing spend this year as a means of grabbing market share from competitors.”
Noteworthy Findings:
- Cash Flow Pressures Mounting: During 2009, falling income put additional pressure on small business cash flow, as evidenced by the 64% of respondents who said cash flow was harder to manage last year. As a result, companies turned to cutbacks over boosting financial reserves. Reducing overhead and expenses (63%) led the list of actions companies took, followed by travel/entertainment cutbacks (55%) and reducing workforce size (45%). Just 11% said they sought new lines of credit and financing.
- Majority See Importance of Planning, but Do Not Have Plans in Place: Small business owners recognize the importance of planning amid the new economic environment and want to spend more time doing it. Eighty-five percent of respondents agreed (65%) or strongly agreed (20%) that the recession put additional pressure on their businesses to plan more effectively. Moreover, 61% indicated they would spend more time on planning and budgets in 2010 than they did in 2009. However, only 44% indicated they had a strategy in place to guide growth during the coming recovery period. Another 44% said they were working on one and 11% indicated they did not have any plan.
