Recessionary gloom is hitting Main Street, as confidence among small-business owners plunged last month to its lowest level in nearly three decades, according to a survey of the National Federation of Independent Business.
The NFIB’s Small Business Economic Trends survey in March fell to 89.6 – the lowest quarterly reading since 1980, and the lowest monthly reading since monthly figures were started in 1986.
The 735 business owners surveyed were worried about the general economic climate and their sales growth. Many also said that they have no hiring plans over the next few months – a bad sign, according to NFIB chief economist William Dunkelberg.
“We are seeing recession readings,” Dunkelberg says in a statement. He added that “the sharp decline in job-creation plans does not bode well for economic growth in the near term.”
Many small firms reported getting hurt by weaker sales, inflation and higher energy costs. Small businesses that reported weaker earnings outnumbered those with earnings gains by 33 percent.
The survey found “no evidence” of NFIB members ailing from credit and cash-flow problems arising from the housing slump and tighter bank lending. “It is a Wall Street issue,” the survey states.
An optimistic Dunkelberg says the survey findings aren’t as dismal as previous recessions. Rather than quickly slashing costs, many small firms are slowing or holding off their spending in hopes that the economy will heat up this year.
“People are pessimistic and think the economy is going down, but they’re still hiring and engaging in capital spending,” Dunkelberg says in an interview. “That means they have a fundamental trust in the economy going forward.”
At CertaPro Painters in La Jolla, Calif., franchisee Tim Chesser says that sales are slowing for his residential-and-commercial painting firm of six employees.
Many customers still call him for estimates, or visit his booth at trade shows. But Chesser says that more consumers are hesitating to sign contracts, and painting jobs are down at least one-third in the first quarter of 2008, even in this wealthy San Diego suburb.
To weather the likely recession, Chesser is stepping up his sales and marketing efforts. He’s calling loyal customers. He’s offering 10 percent to 15 percent discounts, even offering to paint an extra bedroom for free.
“We’re definitely feeling it. Consumers aren’t willing to let go of their money as much as before,” Chesser says. “We’re basically busting our butts and working a lot harder to reach customers.”
