U.S. small business owners intend to grow their companies in 2010 by applying some of the lessons they learned from the recession, according to a new study.
The study, by CIT Group and Forbes Insights, found that 60 percent of the 220 small business owners surveyed expect their business to achieve growth in 2010. Eighty-one percent of them feel smarter about running their company, and 70 percent said the challenges of the recession have made them stronger leaders. Nearly half (45 percent) agreed that the recession exposed flaws in their business strategies that were previously not apparent to them.
Less than a third (28 percent) of the small business owners expect their revenues to be flat and just 12 percent anticipate a decline. At the same time, small business owners are still feeling the pressure of the current economic environment, with 71 percent agreeing that they are working harder and longer than ever before, and nearly a third (29 percent) indicating that the recession has made them doubt their commitment to running a small business.
Small businesses also believe they will play a key role in the U.S. economic recovery, but in spite of support from the federal government. Nine out of 10 respondents agreed that the government's current economic stimulus efforts have not provided any benefits to them. Still, small business owners remain hopeful that Washington will take action to help them, particularly in the area of financing. Fifty-eight percent agreed that higher Small Business Administration loan limits would benefit small businesses.
The study also found that a majority of small business leaders (64 percent) intend to be more aggressive in 2010 by implementing a range of actions to advance their businesses. A full 59 percent of respondents cited a greater focus on operating efficiencies as the No. 1 step to achieving growth in 2010. At the same time, 62 percent plan to invest more in marketing and advertising, while 50 percent will invest in expansion and 46 percent will pursue new revenue streams.
During 2009, falling income put additional pressure on small business cash flow, as evidenced by the 64 percent of respondents who said cash flow was harder to manage last year. As a result, companies turned to cutbacks over boosting financial reserves. Reducing overhead and expenses (63 percent) led the list of actions companies took, followed by travel and entertainment cutbacks (55 percent) and reducing workforce size (45 percent). Just 11 percent said they sought new lines of credit and financing.
Small business owners recognize the importance of planning amid the new economic environment and want to spend more time doing it. Eighty-five percent of respondents agreed or strongly agreed that the recession put additional pressure on their businesses to plan more effectively. Moreover, 61 percent indicated they would spend more time on planning and budgets in 2010 than they did in 2009. However, only 44 percent indicated they had a strategy in place to guide growth during the coming recovery period. Another 44 percent said they were working on one and 11 percent indicated they did not have any plan.
To download a copy of the report, visit http://middlemarket.cit.com.
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