More than 30 years ago, Meatloaf sang that two out of three ain't bad. Sure, it was a hokey and over-the-top love song, but it contains an important theme for entrepreneurs. When everyone else focuses on the negatives, entrepreneurs get busy identifying the positives. They find opportunities where others see problems. Then they act on the opportunities, often risk their capital, and create jobs and competition that keep the American economy chugging along.
At least that's how entrepreneurs normally act, even during tough times. As recently as June, SurePayroll customers were in tune with Meatloaf. Two out of three monthly Scorecard optimism survey respondents were optimistic about the state of the American small business economy. But times keep getting tougher, and the once-optimistic entrepreneurs we survey are now feeling serious doubts about the nation's economy. In August, our optimism survey reached a recent low: one out of two was optimistic. In normal times, small business owners are 80 percent or more optimistic about the future.
But bad has gone to worse. Our September Scorecard survey came back with the lowest optimism number ever—and we've been doing this for more than five years. Now, only one in three small business owners surveyed is optimistic about the current state of the economy. And one out of three is definitely bad.
The news media has been singing economic doom and gloom since 2007, and while entrepreneurs aren't typically swayed by mass media reports, small business owners have good reason to be at their least optimistic. September marked the 12th consecutive month of flat or decreased hiring. SurePayroll customers have witnessed a year-to-date decline in hiring of 2.7%.
To make matters worse, small business wages have remained down slightly for the year. That may sound like entrepreneurs are able to save on labor costs during this recession but for most entrepreneurs, it doesn't necessarily mean they're paying smaller salaries or lower hourly wages. It means they're paying less because they're making fewer goods or performing fewer services. They don't need as much staff because they aren't booking as much business.
I wish I could say good news is on the horizon, or that Washington has a viable solution for rejuvenating the economy. Unfortunately, the President 's release of the American Jobs Act in early September did virtually nothing to help small business sentiment. While 20% of our respondents reported being more optimistic after its release, 40% said they were more pessimistic. A whopping 70% thought the legislation will either do nothing for the economy or even decrease jobs.
This leads me to say what I've been saying for months: Be cautious. I believe that as business leaders, it's not time to place big bets. It's time to wait and try to find a glimmer of hope while remaining realistic that we may have a few more years of economic downturn yet to come.
If you see a slight rise in business that requires more labor, it may not be time to start offering full-time positions. Consider giving your employees more hours and overtime before recruiting new hires. And see if there's any technology, particularly online services, that can help you keep up with demand without necessarily expanding your workforce.
Hopefully business owners can eventually be more like Meatloaf and fly out of this bad economy like a bat out of hell. But for now, Meatloaf is one “Celebrity Apprentice” American small business owners just can't relate to.
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. @michaelalter