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Small Businesses Anticipate Breakout Year Ahead

Entrepreneur Bill Brown had scaled back his San Jose, Calif., construction firm as demand for new Silicon Valley homes and offices dried up in recent years, cutting his staff by two-thirds, to 50 by late 2011.

But over the course of 2013, he has spent $200,000 on equipment and some new trucks and brought staff levels back to about 100 workers, recently hiring 20 more people. He plans to hire dozens more to fill new construction jobs in 2014.

After several false starts in the dragged out U.S. economic recovery, one might expect America’s small-business owners to be wary. Yet many, such as Brown, expect 2014 to be a breakout year, one that finally puts the worst of the downturn behind them.

Of course, entrepreneurs may be an optimistic bunch by nature—few people go into business for themselves expecting to fail. But the optimism may now be underpinned by some encouraging signs about 2014. Overall the economy expanded by 4.1 percent in the third quarter, driven by an upswing in consumer spending, and unemployment overall in November was down to its lowest in five years.

Other business owners across the country are seeing more customers coming through their doors, and placing orders online. And in turn, the owners are more willing to open their wallets, too, spending money on new equipment, vehicles, building repairs or office furniture and fixtures.

Of 937 small-business owners surveyed in December by The Wall Street Journal and Vistage International, 52 percent said the economy had improved in 2013, up from 36 percent a year ago. Another 38 percent said they expect conditions to be even better in 2014, up from 27 percent.

Three out of four businesses said they expect better sales in 2014, and overall, the small business “confidence index”—based on business owners’ sales expectations, spending and hiring plans—hit an 18-month high of 108.4 in December.

According to the latest data from the National Federation of Independent Business, a Washington lobby group, small-business owners in November ranked weak sales below taxes and red tape as their biggest headache for the first time since June 2008. Owner sentiment improved slightly in November but was still dismal compared with pre-2007.

Strong sales, and a healthier bottom line, might lead to better access to capital for some businesses, as banks begin to lend more freely to small firms. Federal regulators are also loosening decades-old rules for raising cash from outside investors, offering new ways for small private companies to finance growth.

Still, Dane Stangler, head of research at the Ewing Marion Kauffman Foundation, a Kansas City, Mo., entrepreneurship advocacy group, cautions that the brighter outlook could be dimmed by a number of unresolved issues that await businesses in 2014.

These include the likelihood of renewed fiscal squabbles in Washington, and the health-care law rollout, which threatens to boost costs for some employers.

“There’s no doubt we’re still in a hangover from the financial crisis,” says Mr. Stangler. “But things look good in the short term,” he says

From a Wall Street Journal article.

About Amanda Bell

Amanda Bell was an assistant editor of Hardware Retailing and NRHA. Amanda regularly visited with home improvement retailers across the country and attended industry events and seminars. She earned a degree in magazine journalism from Ball State University and has received honors for her work for Hardware Retailing from the Association of Marketing and Communication Professionals.

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