Where In The World Is Small Business Headed?


This week PricewaterhouseCoopers released the results of a survey of 1,300 CEOs worldwide showing a fairly optimistic outlook on the global economy for 2014. In fact more than 60% of CEOs in the United States said they planned to increase hiring this year versus last. What’s interesting is the amount of confusion in the market right now. While we see this high degree of optimism among U.S. CEO’s we are reading about layoffs at Best Buy, JC Penney and Macy’s. Even Johnson & Johnson, a stalwart of Wall Street, and one of 4 companies to still carry a triple-A-rating showed signs of concern in yesterday’s financial news indicating a “slowing due to weak prescription drug sales”. The other 3 companies maintaining a triple-A status include ADP, ExxonMobil, and Microsoft.

In our data hungry society we have the ability to create one story that shows extreme confidence supported by data, and at the same time build another story that shows the complete opposite…supported by credible data. The Consumer Confidence Index shows a slight increase in December 2013 but is still below 80. The national unemployment rate is below 7%. And the stock market seems to be unstoppable. All data points that suggest improvements in the economy and beyond.

But peel another layer off the onion and you’ll see that the number of American’s on food stamps has doubled in the last 10 years. In the last 5 years alone there has been a 51% increase in households on food stamps. In just the first few weeks of 2014 nearly 35,000 jobs have been eliminated by some of the companies mentioned above, as well as, others including HP, Kmart, Sears, and Intel. Major companies from Target to Trader Joe’s have announced major cutbacks in employee benefits due directly to the negative impact Obamacare has had on their business.

And now we get to the heartbeat of our country…small business. The latest survey of small business confidence put out monthly by the National Federation of Independent Businesses (NFIB) shows lagging confidence, low expected hiring rates for 2014, and still limited access to credit markets. The report goes on to indicate that the economy, Obamacare, and the current political climate makes expansion less likely as small business owners tend to withdraw from risk when facing these types of issues.

So how can there be such a disconnect between the confidence of small business owners and that of corporate CEOs? Perhaps it could be the fact that many large companies simply have more options. Capital markets and debt markets are two places large corporations can access that small businesses can’t…or at least struggle to.  Healthcare reform, company benefits, and “big company perks” are areas where many small businesses also struggle to compete.  Finally, there is some interesting data from NFIB that shows a signficant increase in the sale of small businesses.  What would be more interesting is to see how many of these small businesses have actually been gobbled up by larger companies taking them out of the equation altogether.  I’ll dig into this more to see what I can find.  If you have any thoughts please comment.

The fact is, we should be spending our time watching what small business is doing rather than relying on what they’re saying.  Some times there is a disconnect between what we say and what we do.  Not because anyone is trying to mislead, but instead because our actions speak to our reality far more accurately than our words.  Listen AND observe.  It’s not either or…there is much to be learned.

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