Small Business Financial Success

Based on revenue and profit projections, the majority of small businesses are in a stable position, though there is downward trend due to the recession. When comparing expected sales for 2009 with the year before, 24 percent of small businesses expect an increase in revenue, 33 percent expect a decline, and 41 percent expect no change from last year (see Figure 27). Due to the economic environment, more small businesses lost revenue than gained.

The situation is worse than the growth trend from 2007 to 2008; a year ago (December/January 2009 wave), 30 percent of small businesses projected that they had increased sales over the previous year while almost an equal number (29 percent) projected they had decreased. If 2009 proves to be the bottom of the downturn, the future prognosis is for positive growth as the economy bounces back.

Figure 27

The majority of small businesses expect to be around in five years, although 26 percent do not due to a variety of reasons that can viewed as positive (retirement, sale for a profit, mergers) or negative (closing down due to financial stress, sale for a loss). Those that expect to continue operating expect to be bigger (see Figure 28), with 69 percent expecting higher revenues and only 1 percent expecting lower revenues. Long run revenue expectations have not changed over the year.

Figure 28

Slightly less than half of small businesses (47 percent) project a profit for 2009, while a quarter of them (26 percent) expect to lose money (see Figure 29). In June, 56 percent of small businesses indicated that they had made a profit for their most “recent fiscal year,” which for most would be 2008. Moving from 2008 to 2009, more small businesses are moving from being profitable to just breaking even.

Figure 29