Small businesses still hunkering down

Some business owners retain a glimmer of hope that the worst of the recession has passed, but most are braced against another downturn, with little debt and minimal investment.

Charles Krupa / AP / File
A pedestrian hunkers under his umbrella as he dashes through the rain in Boston's Financial District on Nov. 4. As small business owners remain hunkered against the economic storm, few if any are planning large investments or a big surge – the kind of activity needed to propel the economy forward.

Several recent studies suggest that small business owners are hunkering down. As sales have declined, these entrepreneurs have cut expenses and shed debt to survive the Great Recession and to hopefully be able to thrive when that increasingly elusive recovery actually begins.

A new study release by Forbes Insights confirms the findings of previous reports.

One of the cautions about some of the previous studies is that the samples used in the studies may not be fully representative of all small businesses. Most of these are conducted among small business owners from membership or client lists.

This study is based on a comprehensive survey of 1.777 small businesses conducted by Forbes Insights in October 2010. All businesses in the survey had 250 or fewer employees, and representative samples of three segments--micro businesses, (less than 10 employees) small businesses (10-49 employees), and medium-sized businesses (50-250 employees)--were targeted. Geographically, respondents were from six international markets: Canada, China, Italy, Singapore, South Africa, and the U.K.

Results from this study reports that small businesses have been turning inward, looking to put their financial houses in order to help ensure they are well positioned to take advantage of economic recovery once it occurs.

Many have tried to reduce their risk by cutting debt and avoiding taking on any new debt. These business owners understand that they need to rebuild their liquidity before they are able to embark on their growth plans. More than ever -- Cash is King.

Many business owners in this study are concerned about another downturn. However, as in other studies, these are the business owners who have survived the first two years of the recession so they have at least a glimmer of hope that the worst of the recession has passed, and that their current actions will put them on the road to future growth and success.

Separate reports are available detailing key findings from each of the six countries sampled in this study.

So those who have survived have adjusted to their new normal and are finding ways to hang in their until good times return.

Sadly, none of these studies find that entrepreneurs are poised and ready to expand. None of them seem prepared to step forward and add fuel to an economic recovery. That is a concern, since it has been small business who have led us out of almost every past recession.

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