Smaller privately held companies are seeing a significant slowdown in their rate of sales growth, according to research from the financial information company Sageworks.
After two years of strong sales growth of approximately 7 percent, small U.S. companies are seeing the slowest rate of sales growth since the recession (less than 1 percent) so far this year.
Sales growth for businesses with less than $5 million in annual sales is virtually non-existent so far in 2013. Companies are growing sales at a rate of less than 1 percent. While profit margins are healthy for now, it may be difficult to sustain if sales growth does not increase, Sageworks cautions.
The slowdown in the rate of sales growth does not bode well for small business hiring. Small businesses were reluctant to hire when they were growing sales at a rate of 7 percent. In addition, smaller manufacturing, wholesale, and retail companies are seeing a sales contraction in 2013 to date.
Sageworks noted, however, that the 2013 numbers are year-to-date estimates and are subject to change and revision.
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