(PRWEB) August 12, 2005
Buffalo Grove, IL PRWEB) August 12, 2005 -- U.S. small businesses are expressing growing concern about increasing interest rates, finding quality employees and taxes, according to a new IPA SBRB study. These factors are tempering earlier optimism about the economy and revenue forecasts for 2005.
Highlights from the survey include:
- Concern about rising interest rates increased significantly from the previous IPA SBRB survey. The current survey was conducted before the Federal Reserve increased short term interest rates on August 9 for the tenth time since June 2004.
- Although a majority feels that the outlook for economy for the remainder of 2005 will be the same or better, the number of those expressing that the economy would be better decreased by 23% from the beginning of the year. At the same time, the number of those thinking the economy will be worse increased by 50%.
- About one-third of small businesses expect a significant (10 % or more) increase in revenue this year and 52% anticipate 2005 revenues to exceed last yearÂs. Both of these figures are significantly below the IPA SBRB study in April.
- Fewer small businesses say they will be growing the size of their staff, continuing a yearlong trend. In addition, small business owners now express growing concern about finding quality employees.
Small business remains upbeat when comparing this year to 2004 with 36% of the small businesses surveyed expecting revenue improvement of 10 percent or more. Nevertheless, the reality of 2005 is setting in compared to April when 44% said they expected significant improvement.
Overall, 52% of small businesses responding indicate some revenue improvement this year down from 63% in the April IPA SBRB survey.
In the current survey, 29% said they would be increasing the size of their staff. This is a decrease from 36% of owners who said they would be hiring in an April IPA SBRB survey. This continues a downward trend from the beginning of the year when 42% of small businesses said they would be increasing staff in 2005.
Only 9% of the small businesses indicated they were decreasing staffing levels for the remainder of the year, the same percentage as in April.
The overall percentage of those expecting the economy to be the same or better remained fairly constant with the beginning of the year, 85% in the current survey versus 88% at the beginning of the year. However, the percentage of those expecting the economy to be worse increased to 15% from 10% and the percentage of those who expected the economy to be better decreased to 43% from 53% at the start of 2005.
Single most important issue
The IPA SBRB studies have tracked the single most important issue to small business owners and senior managers throughout 2005.
The number of small businesses indicating that finding quality employees is the most important issue increased by 50% from the previous survey to roughly the same level as at the beginning of 2005.
Rising interest rates are becoming more critical to small businesses with a 75% increase from the previous survey. In addition, with the end of the year in sight, taxes increased by 25% as an important issue for small business.
ÂFinding and retaining employees is always a critical issue for small businesses,Â said Gregg Steinberg, President of International Profit Associates, the largest privately-held provider of management consulting and professional services to small and medium-size businesses in North America. ÂWith healthcare costs remaining an important concern and the specter of increasing interest rates and taxes putting pressure on the bottom line, small businesses must find new and creative ways to attract and keep quality employees.Â
The results from three 2005 surveys are below.
02/05 05/05 08/05
Economic factors 32% 33% 32%
Healthcare costs 18% 15% 15%
Finding quality employees 16% 10% 15%
Ability to obtain capital 10% 8% 8%
Taxes 8% 8% 10%
Interest rates 6% 4% 7%
Foreign competition 4% 5% 5%
Government regulation 4% 5% 4%
Other/No answer 3% 9% 4%
ÂOverall, entrepreneurial optimism has flagged,Â Steinberg added. ÂWith healthcare, high fuel costs and increasing interest rates entrenched as major issues and the outlook for revenue less optimistic, small businesses must focus with laser beam attention on their core competencies. They must drive efficiency and productivity to maximize profitability for 2005.Â
The International Profit Associates Small Business Research Board ascertains the opinions of small business owners and managers on a wide variety of topics related to their own businesses as well as national and international issues that may impact their operations.
Participants in the poll provide feedback on significant issues and allow for real-time insight into the state of small businesses nationwide. The universe of participants is developed from among small businesses across the United States. Nearly 250 small business owners and senior managers participated in this IPA SBRB poll. The IPA SBRB study is a voluntary survey conducted via phone and email. The poll was structured and supervised through an independent resource.
The latest information about the IPA Small Business Research Board can be found at http://www.ipasbrb.com.
International Profit Associates, Inc. (IPA) is the largest privately-held provider of management consulting services to small and medium-size businesses in North America. IPA and its more than 1,800 professionals offer a wide range of proven and innovative methodologies to help businesses grow and prosper regardless of the economic cycle. IPA either provides directly or through its affiliated companies a comprehensive array of business advisory services, tax and estate planning services or merger, acquisition and other financial advisory services in the United States and Canada. More information about IPA can be found at http://www.ipa-iba.com.
# # #