Economic Groundhog Day for Small Business
Following the progress of the small business economy is starting to feel a lot like being stuck in the movie Groundhog Day; we keep reliving the same thing over and over again. Of course, I see slight variations along the way, but in general we repeat a similar pattern in which the groundhog sees his shadow, and we're left with six more months of winter.
This February we at SurePayroll saw a slight move in a positive direction, according to our Small Business Scorecard. Hiring was flat, after it had been down 0.2 percent in January. And wages were down 0.2 percent, which may actually be a signal that employers are hiring more people (and paying less in overtime). Our Small Business Optimism Survey also found optimism holding steady at 66 percent.
It's a good sign that we're not going in the wrong direction, but I have worked for too many years in business to take one data point and draw a line.
At the beginning of the year, we had high hopes that we would see some more significant growth in hiring, but there seems to still be too much uncertainty for a substantive shift. Gas prices are on the rise, the European crisis still looms, and an upcoming presidential election has small business owners wondering what direction the country will go in.
The rise in gas prices is perhaps the most pressing concern because a dollar spent at the pump is a dollar not being spent on Main Street, where it could help grow our businesses.
That said, I think we will start to observe slight momentum. We report two of three small business owners are feeling optimistic, and our survey this month also found that one of two small business owners are planning to spend money on technology in the next six to 12 months to improve efficiency, better manage customer relations, and increase sales.
On the other side of the spectrum, we still don't have optimism up to pre-recession levels. I believe attitude drives action, so we aren't quite where we need to be to see that action, and we're unlikely to have significant growth in the near term.
My hope is that over the next 60 days we will begin to see more clarity on some of these macroeconomic factors. Maybe then we can start seriously talking about a turnaround, rather than living through this same scenario again and again. I'm certainly ready for a new day.
MICHAEL ALTER | Columnist | President of SurePayroll
Michael Alter is president of SurePayroll, America?s leading online payroll service. He received an MBA from the Harvard Business School and holds a bachelor's degree in economics from Northwestern University.