IPA SBRB Study: Small Business Renews Optimism: Hiring to Increase, Fuel Cost Worries Persist

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As 2006 begins, American small business is nearly as confident as it was at the beginning of 2005, reversing a pessimistic trend that had gained momentum during 2005, according to a new study from the International Profit Associates Small Business Research Board (IPA SBRB). Small business expectations about revenue growth, the general economy and hiring are now measured in the IPA Small Business Confidence Index (IPA SBCI).

As 2006 begins, American small business is nearly as confident as it was at the beginning of 2005, reversing a pessimistic trend that had gained momentum during 2005, according to a new study from the International Profit Associates Small Business Research Board (IPA SBRB).

Small business expectations about revenue growth, the general economy and hiring are now measured in the IPA Small Business Confidence Index (IPA SBCI). In the current survey, the index stands at 52. Small business is nearly as confident as it was in the first quarter of 2005, when the index stood at 55.3. The IPA SBCI now becomes a component of all future IPA SBRB surveys.

“We developed the IPA Small Business Confidence Index to provide an ongoing view of the business climate from the small business perspective each quarter,” 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. “The index will also show how small businesses are reacting and responding to swings in economic and business conditions over time.”

Small business is far more optimistic about the economy than in the last quarter of 2005. In the current survey, 49% say the general economy will be better for the next twelve months compared to just 26% in the previous survey. This is slightly less confident than the 53% who saw a better economy for 2005 at the beginning last year.

Small businesses expect to increase hiring during 2006. In the current survey, 40% say they expected to increase hiring in 2006. This doubles the number from the October 2005 IPA SBRB survey when only 20% of small business owners and senior managers felt they would increase hiring during the following twelve months. This is slightly less than a year ago in the January 2005 IPA SBRB survey when 42% said they would be hiring during 2005.

In the current survey, 67% of small businesses feel their revenue will increase in 2006.     At the beginning of 2005, 71% felt their revenue would increase for the year. In the current survey, 56% said their revenue actually increased for all of 2005.

Fuel and energy costs are firmly entrenched as a major concern to small business. Fuel costs are cited by 13% of the respondents as the single issue that will have the greatest impact on their businesses this year. When asked which single issue will have the greatest impact on their business in 2006, the small businesses surveyed identified these as their top concerns:

Economic conditions 27%

Energy/Fuel costs 13%

Finding quality employees 13%

Healthcare costs 11%

Taxes 11%

“A year ago, fuel costs were not even on the list of top issues for small businesses,” Steinberg said. “Small businesses now say that it ranks with healthcare costs, finding quality employees and taxes as significant issues. It is imperative that small businesses are aware of how to control their true costs to compete in an ever-changing environment. Business must be ready to react to the unexpected.”

The International Profit Associates Small Business Research Board ascertains and reports 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. More than 270 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.

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