NFIB: ‘Poor Sales’ Keeping Small Businesses Glum


Small business owners across the country are in a slump, and don't seem to be feeling any sunnier than they did last month.

According to the National Federation of Independent Business' June Small Business Optimism Index, small business owners' optimism is relatively unchanged from May, still standing its ground in recession territory. The index dropped one tenth of a point in June to 90.8, driven down by expected real sales, the report said. This marks the fourth consecutive drop in the index. The survey was conducted in June 2011 among 3,938 small business owners and NFIB members.

The report found that 69% of small business owners view the current period as a poor time to expand, and 75% of those blame the weak economy for their outlook. Another 10% attribute their view to political uncertainty.

Over the next three months, 11% plan to hire, down two points from May. Additionally 25% plan to raise prices in the next three months, while 16% plan to lower prices.

NFIB Policy Analyst Holly Wade said optimism is stalling among these entrepreneurs—not a good sign two years into the economic recovery.

"We are not seeing any good progress over the last month—they are not seeing anything to be hopeful about in the economy," Wade said. "This is driving their outlook for business in terms of expanding, capital expenditures, hiring."

Wade said the report is disappointing, as optimism had made some improvements at the end of 2010 into the beginning of 2011.

The biggest driver of this negative report is sales outlook for small firms, with "poor sales" being the number one problem for small businesses.

"One in four say poor sales are their biggest problem in running a business," Wade said. "Until that starts to change, I don't know that we will see a lot of improvement."