Recovery? Ask a small business owner...
Over the past several weeks we have polled small business owners in our radio and Internet audience on different questions about the economy and their business practices. Below are the results of three polls, each followed by my comments. Compare your experience with these answers.
Question: How have current economic conditions affected your hiring plans?
Twenty percent of our respondents said the current conditions have not affected their hiring plans. About 40% said they were currently attempting to hire at least one new employee. But a similar number said they were not yet confident in the strength of the recovery to start hiring.
It's good news that approximately six of 10 respondents are not letting the economy alter their hiring plans. But responses to the next question indicate a larger challenge for the recovery.
Question: Will you be more likely to hire people or buy technology in order to take advantage of new growth opportunities?
About 20% of respondents said they would hire more employees, while almost 80% said they would purchase better technology first.
We're currently experiencing the second jobless recovery in a decade, which, as the term implies, is when economic recovery occurs without corresponding job recovery. There are many reasons for this, not the least of which are technological innovations that help small businesses automate many tasks today that once required a human to do. This trend is good for operating efficiency, but it's creating a phenomenon called structural unemployment, which does not contribute to a speedy economic recovery.
Question: What is your recent experience with getting a bank loan for your business?
Only 3% of respondents reported receiving a bank loan recently, while about one in five said they had been turned down for a business loan. About half said they thought their business would not qualify for a bank loan, while 30% said the current economic and/or political uncertainty made them reluctant to borrow right now.
The bad news is that economic recovery will happen at a slower pace than we've been used to in past recessions until more small businesses feel confident enough to consider using a bank loan to take advantage of growth opportunities.
The good news is small business owners have learned how to operate more efficiently with less financial leverage. This practice will pay dividends for those companies when the economy does fully recover.
Write this on a rock... If you want to see how economic recovery is really going, ask a small business owner.
Jim Blasingame is creator and host of the Small Business Advocate Show.
Copyright 2010, author retains ownership. All Rights Reserved.
