Survey shows small businesses struggling but optimistic

Despite decreased profit margins and cash flow problems, businesses surveyed by the Denver Metro Small Business Development Center (SBDC) say they expect their sales to increase and to keep or add to their staff in the next six months.

"I am seeing a greater optimism and confidence in the client business that I work with. It's an attitude that 'we must do business regardless of the economy, so I'll make a decision and move forward' that is necessary for me to succeed in my business," one respondent wrote.

According to research conducted by P&L Research in June and July, more than half of the 308 respondents, 56 percent, answered they expected profits to increase over the next six months. Further, 29 percent expected to increase their staff, while 49 percent expected to keep their staffing levels the same.

"I believe the optimism that was expressed by the respondents is indicative of a key trait of entrepreneurs, which is confidence in their ability to overcome challenges," said Tameka Montgomery, executive director of the SBDC.

The Denver Metro SBDC commissioned the online survey to collect feedback from local small businesses in order to better support and serve them. Issues covered included effects of the current economy, marketing and sales issues, employee benefits, finances and economic outlook.

An interesting note, Montgomery said, is that more than a third thought the Colorado and national economies had improved compared to a year ago and two-thirds expect an improved outlook for their company in the next year.

A number of organizations, including the SBDC, participated in distribution of the questionnaire: The Denver Metro Chamber of Commerce, the Colorado Enterprise Fund, the Rocky Mountain Council, the Denver Office of Economic Development and The Colorado Women's Chamber.

More than half of the respondents were women-owned businesses, while nearly a fourth were minority-owned. A majority of the businesses, 72 percent, had five or fewer full-time employees. Another 8percent had six to 10 employees; 20 percent employed more than 10 people. 

In the wake of the current economy, the survey revealed that, to manage employee expenses, business owners reduced work hours, instituted salary and hiring freezes and/or outsourced responsibilities. The survey also revealed that business owners are taking a cautious approach to managing their businesses with about three in 10 anticipating increasing their staff in the next six months. 

Finally, when ranking issues of top concern, respondents ranked cash flow, poor sales and earnings, health care insurance costs and taxes as the most troubling.

"In our 17 years in business, the end of 2008, all of 2009 and the first half of 2010 have been devastating. We have sold assets, drastically reducing our personal net worth. Our credit was ruined due to credit cards and loans and leases being paid but being paid late. We have cashed in some of our 401k, borrowed against our retirement, etc. to stay afloat," one respondent wrote. "Sales are increasing, but we are cautious about the future."

"This was our first time issuing such a survey, and I hope to do another one in 12 months to gauge changes in business owners' sentiments," Montgomery said. "We will use the insight gained from this survey to guide us in determining how the Denver Metro SBDC can provide more value to business owners.  One way is providing resources to help business owners understand the impact that the national health care reform may have on their companies."