The Small Business Index, from MetLife and the U.S. Chamber of Commerce, shows small businesses feel good about the U.S. economy.
If you’re a small business owner and feeling upbeat, you’re not alone. The strong economy continues to pave a smooth path ahead, and many entrepreneurs are driving that road with confidence.
For proof, consider the findings from MetLife and the U.S. Chamber of Commerce’s second quarter Small Business Index: 59% of small businesses surveyed believe the national economy is in good health, up six percentage points from the first quarter of the year. Female business owners are also more bullish on the national economy this quarter versus last, with 58% now expressing optimism (compared to 59% of male-owned companies).
Across sectors, manufacturers — who signaled a drop in economic optimism last quarter — are the most positive about the U.S. economy, with 69% feeling positive about the country’s economic outlook, a 16 percentage-point jump from Q1 2019. Optimism also increased among those in the retail sector (59% in Q2 vs. 48% in Q1) and services sector (58% vs. 49%), but dipped for professional services company owners (56% vs. 61%).
What’s behind this small business buoyancy? Many agree that leading indicators like robust employment, a rebounding stock market and low interest rates have certainly contributed to economic enthusiasm.
“Small business owners are resilient and tend to focus on the business challenges at hand without losing too much sleep over macroeconomic trends,” said Sharon Miller, head of small business for Bank of America, who noted that small business account for $7 trillion of U.S. gross domestic product and 62% of all net new private-sector jobs created since the Great Recession. “We continue to see historically higher levels of optimism in the small business outlook for sales, growth and job creation — all signaling that the small business sector is poised to continue growing in 2019.”
Ryan Novak, owner of Chocolate Pizza Company, said 59% of small business owners like him believing the U.S. economy is in good health feels about right.
“Consider that even a ripple of disruptions in the national economy can be a tsunami for small businesses. Given that small business infrastructure is less robust and our client bases aren’t as deep or diverse as major corporations, there’s an inherent nervousness among small business owners that would explain why the number isn’t higher than 59 percent,” said Novak, who has enjoyed a significant increase in sales over the last few years. “The same sensitivity that feeds small business anxieties also means that we’re in a prime position to sense the overall health of the economy.”
“Stronger optimism helps business owners get past the hesitation of risk and move toward growth.”Ryan Novak, owner of Chocolate Pizza Company
Abhi Lokesh, CEO and co-founder of Fracture, suggested that manufacturers in particular are more optimistic lately due to ongoing trade wars.
“Domestic manufacturers are hopeful that the aggressive tariffs or threats of tariffs being placed on trading partners like China, Mexico and India will push consumers to purchase domestic goods because they’ll be cheaper than the imported alternatives,” Lokesh said. “Professional services companies are less optimistic, on the other hand, because they’re taking a longer-term, more high-level approach to assessing the health of the economy. Many of them may feel pessimistic, like I do, that the current administration’s economic policies could end up hurting the economy.”
Nevertheless, continued hopefulness about the country’s economy should translate into more investment and expansion for small companies.
“Stronger optimism helps business owners get past the hesitation of risk and move toward growth. You strike while the iron is hot, which means that, while the economy is booming, an owner like me invests in new equipment, increased marketing budgets, adding new talent and training existing staff,” Novak said. “A strong national economic picture makes it easier to run a small business also because employees are more readily motivated and productive.”
The one major challenge in a hot economy?
“Small businesses will need to find ways to stand out from the crowd to attract top talent by offering enhanced benefits and adopting a more flexible work environment,” said Miller.
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