State of the Small Business Union, 2013
FOR IMMEDIATE RELEASE
Jan 16, 2013 – In 2012, countless clients told Valcor and our network of consultants that they were uncertain about overhead, regulations and taxes. They were uncertain about debt ceiling ramifications on the U.S credit rating, political fiscal cliff debates, global economic events in China and Europe, health care costs and who would occupy the White House for the next four years.
Now, at the beginning of 2013, with the U.S. election results behind us, many business owners have a sense of what to expect for the next year.
According to the latest National Federation of Independent Businesses Optimism Index, “business owners’ negative outlook for relief continues at historic low levels. And they aren’t alone in their worries. The constant political positioning by both parties is causing fear that no serious resolution to the fiscal debt crisis will occur …. A new Gallup poll found that 77 percent of Americans believe politics is seriously harming the nation.”
This is hardly good news for business owners who were hoping for a post election rebound.
Why are the NFIB and Gallup polls important? We are living in a society where perception is everything. How you view something will dictate your decisions when it comes to spending. If you believe you are likely to get a raise at work, you will plan that vacation, buy household items or even a new car. If you believe you may lose your job, or that your company may reduce benefits, you will tighten your wallet, thus not making those purchases.
Equate this to the 27 million business owners who are surveying the landscape and deciding on whether to invest or pull back. Business owners want to succeed and prosper. The livelihood of their families and those of their employees depend on it.
It is the responsible business owner who makes decisions based upon the data, not how they perceive those facts.
Does the recent number of massive business regulations, the increase in payroll taxes, and the constant bickering from Washington help that perception?
Business owners say no.
The 2 biggest opportunities for the immediate future also have inherent threats:
- There are some positive indicators suggesting a nascent rebound to the devastated commercial real estate market. We hope this continues as the construction industry has all but vanished in many U.S. cities and would create much needed jobs. For this to truly occur, the banking sector will have to provide business loans. Unfortunately we do not see this happening soon. Interest rates are too low for banks to risk making loans when they can easily get a higher return on other financial vehicles.
- There are some positive indicators in regards to the U.S. being in a stronger position than the Eurozone, which will allow the U.S. to remain as the global economic power. While this allows commerce to remain relatively healthy, it justifies the politicians to not make hard decisions when it comes to reducing the unfathomable sovereign debt. They will continue to kick the can down the road yet again. The debt ceiling debate will be brutal and personal. We predict another debt ceiling increase will occur after much political infighting and the credit agencies will threaten the U.S. credit rating once again.
The threats of these 2 issues alone would create more perception problems which would cause those sidelined business owners to maintain their trepidation resulting in a continuation of what we have seen for the past few years: An anemic and tentative period of slight growth, with periods of decline.
In other words, more of the same.