I own a small business. Over the past four years we have seen no recovery. Sales are off 55% from 2007. Sales seemed to have reached a bottom about two years ago . Then in 2012 we slipped another 10%. Since the beginning of the year , business has dropped off to a level we haven't seen since the depression/recession months in 2009. We actually had a better year over-all, but the first few months were dead. That's the way it is now.
Thinking it was something we weren't doing or something bad that we have been doing, we waited it out. We did some customer only email campaigns, lowered prices, and did three adwords campaigns. Now it's mid February and there is no hint of improvement. I've called my small network of business owners to see how things were. It's been pretty much the same. It's slowed to a trickle. There was a small independent rep firm that was doing "ok" as they came off fresh from the annual N.A.M.M show...
That was until yesterday when a company that the firm had represented for 25 years called and told the principal they were firing all the reps and upper management. They were folding the company into another one and would have all products made overseas and distributed by one company here in the US.
I looked at the National Federation of Small Businesses Index. Enclosed are the readings they have as of the 12th of this month.
Sales: Sales trends remain overwhelmingly negative for small employers, with still more owners reporting declining sales than experiencing positive sales trends. The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past three months improved 1 point in January, landing at a negative nine percent. For context, the five-year high of a net four percent was reached in April of 2012. The low for this cycle was a net negative 34 percent in July of 2009. Nineteen (19) percent of owners still cite weak sales as their top business problem. Seasonally unadjusted, 19 percent of all owners reported higher sales (last three months compared to prior three months, up 1 point) and 32 percent reported lower sales (up 2 points). As consumer spending remains weak, so do the expectation for real sales among small employers. The net percent of owners expecting higher real sales volumes improved 1 point to a negative one percent of all owners (seasonally adjusted), still 13 points below the 2012 cycle high of net 12 percent reached in February 2012. Not seasonally adjusted, one quarter of owners surveyed expect improvement over the next three months (up 5 points) and 32 percent expect declines (down 8 points).
Job Creation: Job creation was positive in January, but ever-so-slight. Overall, 11 percent of surveyed owners (unchanged) reported adding over the past few months, and nine percent reduced employment (down 4 points), seasonally adjusted. But the vast majority—the remaining 80 percent of owners—made no net change in employment. Forty-three (43) percent of owners surveyed hired or tried to hire in the last three months and 34 percent (79 percent of those trying to hire or hiring) reported few or no qualified applicants for open positions. Eighteen (18) percent of all owners reported job openings they could not fill in the current period; January is up 2 points from December, but still historically low.
Inventories: The pace of inventory reduction continued in January, with a net negative seven percent of all owners reporting growth in inventories (seasonally adjusted), 3 points better than December, but still more owners reducing stocks than adding to them. Unadjusted, nine percent reported growth in inventory stocks (down 2 points) and 22 percent reported inventory reductions (up 1 point). For all firms, a net negative one percent (down 1 point) reported stocks too low, historically a good level of satisfaction with inventory stocks. Plans to add to inventories remained weak at a net negative seven percent of all firms (seasonally adjusted), 3 points worse than December.
Capital Spending: The frequency of reported capital outlays over the past six months rose 3 points to 55 percent. Of those making expenditures, 39 percent of owners reported spending on new equipment (up 3 points), 21 percent acquired vehicles (up 3 points), and 12 percent improved or expanded facilities (down 1 point). Five percent acquired new buildings or land for expansion (down 1 point) and 11 percent spent money for new fixtures and furniture (unchanged). Overall, there was no sign that capital spending might be returning to levels more consistent with past recovery periods. Twenty-one percent of owners plan to make capital outlays in the next three to six months, rising 1 point from the month prior. Six percent characterized the current period as a good time to expand facilities (down 2 points), historically a very weak number. The net percent of owners expecting better business conditions in six months was a net negative 30 percent, 5 points better than December but still dangerously low—the fourth lowest reading in nearly 40 years.( Bold- my emphasis )
Capex spending is a leading indicator of where small business is headed. Having the fourth lowest reading in History backs up the low level of small business confidence. This is a number that feeds on itself. I also noted that many small business people complained of sales dropping before the fiscal cliff and staying down after which many here, including myself predicted.
Some additional insight from the New York Times
The struggles of small businesses ripple through the rest of the economy. They are reluctant to invest in expensive capital equipment, for one.
Mr. Starkey said that eight or nine years ago he could have justified investing in a $25,000 piece of equipment that would help him make a particular piece for a Ford Mustang, since he knew he would be able to earn back his investment in six months. But today, he doesn’t know if he will be able to get a return in six months or two years, and “having that kind of money tied up in one item is just too great a risk.”
“Until the small-business sector starts to feel better,” he said, “the rest of the economy isn't going to feel much better either.”
Note this survey was done for the Month of January. We won't know how February is shaping up until Mid March. So I thought I would generate a poll here and see how Kossacks who work for a small business or own a small business are doing.