Since the end of 2007, the economy has affected thousands of American small businesses. Some have successfully navigated through the winds of a rough economic climate, while others have given up and filed for bankruptcy. Although economic indicators are looking positive, we're not out of the proverbial woods yet.
The Small Business Administration (SBA) Office of Advocacy publishes a quarterly small business economic indicator pamphlet that provides detailed numbers and trends about the economic standings. Below are three important economic indicators that might affect your small business in 2010.
Economic indicators show that unemployment still continues to rise to its highest level of 9.8% as of September, 2009. About 677,000 jobs were lost in Q3 2009, and a total of about 7.1 million have been lost since the economic downturn in 2007. All major employment sectors continue to see net job losses, except education and health services, which have seen slow but steady gains in employment throughout the economic windfall.
What does that mean for small business hiring? Although unemployment is at its highest, the Board of Governors at the Federal Reserve expects the trend will decline to a level between 9.3% and 9.7% while the economy expands 2.5% to 3.5% in 2010.
Nonetheless, small business managers are timid about hiring new employees. Statistics from the National Federation of Independent Business (NFIB) show that more small business owners are interested in growing their business than in previous months, but the net percent planning to hire in the next three months decreased by 4% in Q3 2009.
Small Business Loans
Small business economic indicators show that SBA backed loan volume grew greatly in the third quarter of 2009. The SBA 7(a) guaranteed loan program increased by $247 million, while the SBA 504 fixed asset loan program was up $305 million.
These increases correspond to the NFIB's report that business optimism about the economy is also on the rise. Small business managers are spending more to expand and grow their business and using historically small interest rates to do so.
Small Businesses Owners' Financial Outlook
Although Q3 2009 small business bankruptcy numbers were not available, the previous 12 months from July 2007 to June 2008 showed over 54,000 bankruptcies, with 16,000 in Q2 2009 alone. This is the highest number in over 5 years. However, as small business economic indicators are showing with lending and optimism, there is a light at the end of the tunnel.
Small business proprietor income increased once again since 2008, and it was up 4.1% by the end of September, 2009. The growth looks to be part of the increasing macroeconomic trend in the gross domestic product, which was up 3.5% in Q3 2009.
Small businesses owners who have made it thus far through the economic downturn can rejoice with the numbers shown in small business economic indicators. Keeping a pulse on these economic indicators can help you gauge your business strategy and make adjustments if needed. If chief economists are correct, 2010 will be the year to grow your small business and hire more employees.