Many Small Businesses Expect Big Second Half

Tweet

August 10, 2004 -- While economic data has been painting a blurry picture about what actually happened in the first half of 2004 and casting doubt on the future, small businesses reported doing well and expressed confidence that the second half of 2004 will be even better, according to a new survey.

Nearly 70 percent of small businesses surveyed by International Profit Associates, Inc., a small business consulting firm, said they met or exceeded their expectations in the first half. Looking to the second half, 88 percent forecasted that they'll meet or beat their projections.

Despite confidence about the future, businesses are still planning on keeping spending under control. More than half of those polled indicated that they will maintain their current level of capital spending, while 15 percent said they would reduce spending from their original budgets. A little more than 30 percent said they intend to raise capital spending.

"While there are many business owners and managers who will support their projections by boosting capital expenses," said Gregg Steinberg, president of IPA, "there are many that believe their business will improve based upon the natural progression of the economy or they have excess capability already built-in to meet future demands."

One issue dividing opinion in the survey will continue to play itself out on Tuesday, when Federal Reserve policy-makers meet to set short-term interest rates. While 55 percent of respondents said that raising interest rates between a quarter point and one point by the end of the year won't have any impact, more than 30 percent said such an increase would hurt their businesses and 10 percent said it would help theirs.

Matt Quinn

Matt Quinn contributes to the Wall Street Journal's corporate finance blog. He has also written extensively about banking and corporate finance for publications including Inc., American Banker, and Financial Week. He lives in Brooklyn, New York.