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Small Business Digest


  
    February-2013
 
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Tax Increases, Added Competition Drives Small Business Leaders' Gloom

In the aftermath of the Presidential election, many small business leaders say they are more pessimistic about near and long term growth for their companies and the country.

Overall average small business revenues declined in October according to the Intuit Index and more people became self-employed, further spreading the available pool of sales available.

The October Intuit Small Business Revenue Index shows a 0.3 percent decline from the previous month. The real estate and health care industries saw the biggest drop-offs, at 0.9 and 0.7 percent respectively. Professional services followed with a decline of 0.6 percent. The index is based on data from QuickBooks Online and covers the period from January 2005 through Oct. 31.
 “The decline in small business revenue is disheartening, and appears to be happening despite a rise in single-family construction and existing home sales,” said economist Susan Woodward. “There has also been a 4.4 percent increase in the number of people who are self-employed since November 2011. That brings new entrants to compete with incumbents and may explain the steady decrease in revenue per small business.”

At the same time, the recently released Thomson Reuters/University of Michigan Surveys of Consumers shows that consumer confidence remains at its 5 year high, with the November’s Sentiment Index at 82.7, virtually unchanged from the 82.6 reading in October. The Lending Circle highlights this new data to point out that based on the current survey consumer optimism remains high, however, the continuation of that optimism is relying on the government keeping taxes low.

Something most political observers view as unlikely as President Obama pushes for higher taxes.

Companies are rushing to push dividends and other investment funds to shareholders in 2012 in expectations of higher taxes in 2013.

For small business owners, the new taxes are expected to eat into their personal financial rewards.

A majority of small business owners polled by this newsletter’s parent said they were disappointed by the results of the Presidential contest. While hopeful President Obama would be sympathetic to their needs, a significant majority (61%) said they were worried his priorities would not help them in the near-term.

The poll was taken during the three weeks immediately following the election and encompassed 300 owners/presidents across the nation.

Hair salons and spas, an industry highly dependent on consumer discretionary funding while reporting they are optimistic about the future also say they are unsure about 2013.

Sunovis Financial’s Professional Beauty Association Salon/Spa Performance Index registered a drop in the third quarter of 2012, bringing it to the lowest level in 4 quarters. The Current Situation Index portion fell below 100 for the first time in nearly three years, indicating concern about contraction within the industry. The Expectations Index, a measure of the 6 month industry outlook, remained strong at 104.7, indicating continued optimism for the future of the spa/salon industry.


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