Banking & Finance
Doom and gloom
Executives at smaller companies are growing pessimistic about the economy.
By Todd Shryock
Smart Business Cleveland | October 2000
There are a lot of unknowns affecting the business market right now, including the Federal Reserve, technology issues and a tight labor market. Media reports keep hinting at an economic slowdown, and the opinions of business owners are starting to reflect that.
According to a recent survey by Heller Financial, the number of owners and high-level executives who expect the economy to do well during the next 12 months has declined from 53 percent to 43 percent.
Expectations for negative economic performance have nearly doubled -- from 12 percent first quarter to 23 percent in July. The Heller Financial Main Street Business Pulse is a quarterly snapshot of the issues concerning the leaders of small- and middle-market companies.
However, executives' enthusiasm for their own companies' prospects is widespread. More than three-fourths of respondents are optimistic about their company's outlook for the next quarter; only 6 percent are pessimistic.
"The survey suggests that small- and middle-market company executives recognize that they could be operating in a more challenging environment in the coming months," says Richard Almeida, Heller's CEO. "But their overwhelmingly optimistic outlook about their own prospects may indicate that these executives feel capable of making smart choices -- about markets, business plans and financing partners -- that will help them succeed. Their confidence is translating into continued investments to grow their business."
Past experiences may be a factor in the outlooks of some. Small- and middle-market executives between the ages of 18 and 34 are significantly more likely to anticipate positive economic performance than executives who are 35 or older -- 50 percent vs. 36 percent. Yet more older than younger respondents are optimistic about their own company's outlook -- 82 percent vs. 74 percent.
Other survey highlights include:
Business owners are optimistic. Owners are much more likely than not to anticipate a positive economic performance over the next 12 months -- 47 percent vs. only 19 percent whose outlook is negative.
Business owners are experiencing significant attrition. A full 28 percent have lost between 11 percent and 30 percent of their employee base in the last 12 months.
Business owners are finding recruiting and retention more difficult. Forty-five percent said it is more difficult to attract and retain employees today than it was a year ago.
Business owners are not experiencing an Internet brain drain. Nearly 60 percent have not lost a single employee to a dot-com in the last 12 months. They're not particularly worried about the prospect -- 85 percent expressed little or no concern about the issue and only 1 percent were extremely concerned.
The survey was conducted online in April for Heller Financial. It includes the responses of 827 owners and high-level executives of small- and middle-market companies across the United States. How to reach: www.hellerfinancial.com
Todd Shryock (tshryock@sbnnet.com) is SBN's special reports editor.
