Courtney Rubin

Will Small Business Optimism Ever Recover?

In 2005, 85 percent of business owners were optimistic about the future.

 

It's a tie between small business owners who think the economy and their businesses will improve—and those who think both will tank, says a new report.

The latest edition of American Express Open's semi-annual Small Business Monitor suggests small business optimism has not recovered from the hit it took in 2008.

The report analyzes the 18 surveys of the past decade, all of which started with optimism questions. Owners of businesses with fewer than 100 employees answer four questions about the next six months, with issues ranging from expanding business opportunities to how much the individual company is at risk of going out of business because of the economic climate.

Concludes the report: "The 2008-09 recession...changed the psyche of small business owners, eroding their confidence and producing an extended period of volatility and trepidation, which continues today, two years after the economic experts say the recession has ended."

It's been a long way down from 2005, when 85 percent of owners thought the future looked bright. Optimism stayed high until late 2007, says the report—which corresponds to when the National Bureau of Economic Research dates the start of the recession. (For the record, it dates the end of the recession as June 2009.)

"Between 2002 and 2008, small business owners across the country were operating with optimism across the country regardless of gender, industry sector, or size of firm," says the report. "Since the 2008-09 recession, however, small-business owners have not yet recovered their 'sunny disposition.'"

Who are the biggest pessimists? Owners of businesses with 20 to 49 employees and with annual revenues of $500,000 to $999,999.

Another finding: Small business owners in the retail sector are the "canary in the coal mine" of business optimism. They lead the way down when optimism dips, and they've lagged in their recovery.

Inc. contributing editor Courtney Rubin was for five years a London-based staff writer for People magazine. Rubin, a former senior writer for Washingtonian magazine, has written for the New York Times magazine, Time, Marie Claire, and other publications. She is the author of The Weight-Loss Diaries.