More than one-third (35 percent) of small business owners believe the economy is recovering, but they are proceeding cautiously and managing their resources more closely by tempering plans for growth, hiring modestly and getting more out of their employees.

A new survey by American Express found that 67 percent of the small owners polled say that workforce productivity has improved and fewer are concerned about having cash available to pay bills (50 percent vs. 59 percent last spring).

The employment picture is improving at small businesses, with 35 percent planning to hire full- or part-time employees (up from 31 percent in the fall), and far fewer said they will freeze hiring or cut back (44 percent, down from 61 percent in the fall). In spite of the promising outlook, these signs of recovery do not translate into immediate plans for growth. The top priority of small business owners is maintaining their current business and sources of revenue (31 percent) followed closely by growing their business (29 percent, down from 37 percent last spring).

“The research clearly shows that we cannot look at any one economic indicator in a vacuum to predict small business investment behavior,” said American Express OPEN president Susan Sobbott in a statement. “While small business owners are more optimistic about the economic recovery, they are not turning a blind eye to the uncertainty that lingers. They are waiting for more proof that the recovery is real and sustainable before investing heavily in growth initiatives.”

Thirty-four percent of business owners say their appetite for risk is greater than it was a year ago. Men are far more likely to say their appetite for risk is greater than it was a year ago (42 percent compared to 25 percent of women). The type of risk entrepreneurs are most willing to assume in order to grow their business is entering a new/unexplored market (19 percent).

While growth is not currently a top priority, when asked what would most help them grow their businesses, nearly half (46 percent) say increased customer demand. Other growth generators include tax cuts (20 percent), access to capital (13 percent) and the ability to hire more staff (7 percent). Tax relief is the most pressing issue the President and Congress need to address (33 percent).

Entrepreneurs looking beyond U.S. borders for growth opportunities are among those most likely to experience steady revenue gains. While they are still the minority (15 percent), their success is noteworthy: they report 23 percent revenue growth on average over the last three years.

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