Small Biz Owners See Second Recession Coming

75 percent judge it likely or highly likely in survey

While everyone should be careful not to make this a self-fulfilling prophecy, small business owners should also prepare for a second recession, according to a new survey.  In fact, according to the survey, most small business owners are probably already making themselves ready, since 75 percent of them believe a second recession’s on the way.

Rasmussen Reports, on behalf of the Discover Small Business Watch, surveyed 750 small business owners, and an official Discover statement explained afterward, “75 percent of small business owners believe it is likely or highly likely that the economy will slip into another recession before it fully recovers, with 15 percent believing another recession is not very likely to happen and 10 percent feeling unsure.”

That’s pretty unambiguous (and bad) news.  We can only hope the majority of respondents also expect the second recession will be shorter or less severe.

As for how the responses to the more routine parts of the survey turned out, more business owners rated the economy is “poor” in July than June (58 percent versus 51 percent), and 57 percent said it’s getting worse, too (versus 51 percent).

That led the overall index to hit 83.0 in July, down from 86.1 in June.

Small business owners shouldn’t count on things improving too soon, then, and should maybe start thinking about how any tricks picked up during the first recession could be refined during a repeat performance.

Small Business Confidence Dips Slightly In June
By Mike Sachoff – Mon, 06/28/2010 – 5:10pm.

Cash flow issues lead to dip

Small business owners’ economic confidence leveled off in June, stopping a two-month rise, according to the Discover Small Business Watch.

The index fell slightly to 86.1 this month from 87.4 in May as rising concerns over temporary cash flow issues offset some improvement in the way small business owners see the climate for their own operations. Small business owners reporting temporary cash flow issues jumped to 51 percent in June, up from 45 percent in May and the highest since January. Forty-five percent of owners reported no cash flow issues, down from 48 percent in May; and 4 percent were unsure.

The Watch recorded a slight increase in confidence about how individual business owners were faring: 30 percent say economic conditions for their businesses are improving, up from 28 percent in May; 43 percent said conditions are getting worse in June, down from 44 percent in May; and 34 percent said things are staying the same, up from 24 percent in May.

“Many small business owners are working harder than ever to make payroll, pay their bills and keep their businesses running,” said Ryan Scully, director of Discover’s business credit card.

“Last month, more owners reported increasing their spending, which is good news. However, if sales are lagging this month, it’s possible that cash flow was more of an issue.”

In June, 29 percent of small business owners said they believe the overall economy is getting better, falling from 35 percent in May; 51 percent say the economy is getting worse, steady from the previous month; and 16 percent see the economy as the same, up from 12 percent in May.

Business Owners’ Confidence Still On The Rise

Discover index at seven-month high in May

If the latest information from the Discover Small Business Watch is to be believed, small business owners are now feeling more confident than they have in quite a while.  Discover’s monthly index puts confidence levels in May (which is close to “now,” anyway) at a seven-month high.

Here are a few cheerful facts: compared to April, more small business owners said they believe the economy is improving (35 percent versus 31 percent).  Also, more small business owners said they were increasing spending (25 percent versus 23 percent).

Finally, on a year-over-year basis, only 51 percent of small biz owners canceled or postponed vacation plans due to the economy (versus 58 percent for May 2009).

All of this caused Discover’s index to rise from 85.1 in April to 87.4 in May.

Ryan Scully, director of Discover’s business credit card, then observed in a statement, “This boost could be significant because we were polling following the week in which the Greek banking crisis reverberated through Europe, the gulf oil spill intensified and the Dow Jones plunged below 10,000.  By their responses, small business owners are seeing improvement in the economy in spite of bad news.”