Will Small Business Optimism Ever Recover?

By Karen Axelton

American Express OPEN recently celebrated the 10^th anniversary of its semi-annual Small Business Monitor surveys by releasing a retrospective report that analyzed the results of the surveys over the past 10 years. The results have some sobering data for small businesses.

The study found that before the “Great Recession” of 2008, small business owners nationwide were typically optimistic, no matter what their gender, industry or size of their business.  Since the recession, however, entrepreneurs have not yet recovered their “sunny disposition,” according to the American Express OPEN® Small Business Monitor Optimism Review.

The study looked at small business owner responses to two positive and two negative statements about the economy and subtracted the negative responses from the positive to come up with a “net optimism score.” In fall 2002, for example, 64% of entrepreneurs had a positive outlook about their business’s future, while 29% had a negative view, for a net optimism score of +35. In the spring of 2011, 49% had a positive view, while 48% held a negative view, for a net optimism score of just +1.

Here are some more findings:

Between late 2002 and late 2007, optimism was high among virtually all small business owners, peaking in mid-2005. However, between late 2007 and early 2008, optimism took a nosedive and since then, hasn’t recovered for any business owner, regardless of geographic region, company size, industry or sex of the owner.

Business owners in the South and West were the most optimistic in the country before 2008. But in the past four years, businesses have become more volatile in their outlook depending on what part of the country they are in. In the most recent Small Business Monitor survey (spring 2011), net optimism scores by region are:

• Northeast (+15)
• West (+4)
• South (+3)
• North Central (-19)

Before 2008, there was little difference in optimism by firm size. Since then, larger small companies have shown more volatility in their outlook, with the biggest decline in optimism among those with 20 to 49 employees and those with $500,000 to $999,999 in annual sales.

Who’s the “canary in the coal mine” for small business optimism? Small retailers are the bellwether industry group. When business optimism plummets, their pessimism leads the way.

How does this report jibe with your outlook for your small business?

Image by Flickr user loneymops (Creative Commons)

This entry was posted on Tuesday, September 6th, 2011 at 6:00 am and is filed under Small Business, small business. You can follow any responses to this entry through the RSS 2.0 feed.


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