While the experts disagree as to whether the recession has ended, or if it's simply leveled off, reports from small businesses show that conditions were worse at the end of 2009 than they were at the end of 2008.
In case you don't remember, the media surmised 2008 was possibly the worst year ever for Wall Street, the Fortune 500, newspapers, and even movies. It was the year where everything sucked. For many, however, the effects of 2008 weren't realized until 2009.
Small businesses bore the scars of a rough 2008, but the National Federation of Independent Businesses (NFIB) reports 2009 was worse for small business than 2008, if that's even possible.
ComScore reported while the 25 largest retailers (Amazon, Sears, Best Buy, etc) grew their sales in 2009 -- sparking talks of recovery -- the nation's smaller retailers saw sales drop by 7 percent. The media ran with this 4 percent difference, an increase over 2008, and heralded that retailers showed increasing sales from 2008 to 2009, surely signaling a recovery.
Was this a true sign of economic recovery or a warning sign that while positive, it merely highlights the fact that the largest retailers were able to capitalize upon the misfortune of small businesses?
ComScore brings up a valid point in their blog; those with the resources to advertise during dark times emerge stronger when it's light again. Other than a select few small retail outfits, what businesses can afford to market when most fight just to keep the lights on?
That would be chain stores, big-box stores, and huge discount retailers such as Walmart, Target, and Best Buy.
The NFIB's January 2010 Small Business Economic Trends shows startling information regarding how bad it's become for the small-business operators in the U.S. Key facts that led to the demise of small businesses included:
- Widespread price cuts caused an overall fall in sales volume.
- Lack of sales -- claimed by 35 percent of small business owners -- was cited as their largest hurdle.
- A mere 12 percent of small-business owners reported higher earnings Oct.-Dec. 2009 compared to the same period in 2008.
- Fifty-four percent of respondents reported lower earnings year-over-year (YOY).
- Forty-three percent of small businesses stated profits declined in the fourth quarter of 2009.
- Low sales volume was attributed as the cause for lower earnings.
- The “job generating machine” remains in reverse, as jobs are being lost and new hiring is very weak.
- Ten percent of the owners increased employment, but 22 percent reduced employment.
In addition. the Small Business Optimism Index fell, resting just seven points above March 2009 (the second-lowest point in the survey's 35-year history), despite the fact the economy showed growth in the second half of the year.
Thus, while the overall signs may show recovery, small businesses are still showing signs of economic turmoil. The Small Business Administration reports small businesses "have generated 64 percent of net new jobs over the past 15 years" (or roughly two-thirds of all jobs).
Although the media paints a rosy picture of economic recovery, the nation's still not out of danger.