For Most Small Businesses, 2018 Was a Good Year

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While December has been a lousy month for the stock market, 2018 has generally been a good year for small-business owners. Over half (55%) of owners or decision makers at small businesses in the United States said that their business is better off today than it was a year ago, according to a new survey from Fundera.

Another 33% said their business has remained steady, leaving only 12% that saw their fortunes decline in 2018. Those are very strong and encouraging numbers, but that doesn't mean it should be assumed the good times will continue to roll.

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"While market conditions are strong now, it's important small businesses use this time wisely to set themselves up for growth and success with the resources required to do so, regardless of potential economic shifts to come," said Fundera CEO Jared Hecht in a press release.

Go big or go home?

Bigger small businesses -- the ones with more employees and more revenue -- were more likely to have benefited from the strong economy in 2018. More (17%) owners and decision makers at companies with two to 10 employees said their business was worse off than a year ago than companies with 11 to 50 employees (10%) or 51 to 100 employees (9%).

It's possible that smaller companies have simply not yet established themselves as viable businesses. Some may be failing -- or at least not growing -- because they're not viable ideas for companies that support more than a few employees.

A look into 2019

Despite the strength of 2018, only 45% of small-business owners and senior decision makers "believe the U.S. economy will remain strong and continue to grow, making for a positive business environment for small business growth with more opportunity in 2019," according to the survey. Almost three in 10 (28%) believe the "economy will stagnate with slowed growth, making for a negative business environment for small business growth with less opportunity in 2019."

Small-business owners plan to deal with the upcoming year in a number of ways, according to the survey results:

  • 10% will seek financing options to invest as a way to grow their business.
  • 10% want to open a new office or location.
  • 25% want to hire more permanent employees.
  • 18% want to create and release a new product or service.

Plan for both cases

The reality is that neither small business owners nor anyone else knows what to expect in the new year. The economy could continue to grow, the stock market could move in either direction, and countless other things could happen.

Smart business owners have a plan for a good economy and one for if things go south. It is, of course, a challenge to decide how to allocate capital in an uncertain economy. Employees can be a somewhat flexible expense, but opening a new location or making a major capital investment can't be as easily rolled back.

Because of that, it's important to have a contingency plan for what happens if things don't go well after taking on a major expense. You need to know if you're gambling your future, which is sometimes a risk worth taking, or if there's a backup plan to fix your budget if the economy falls off or things don't go as planned.

Uncertainty can't be eliminated, but it can be planned for. That can help lessen the damage when something bad happens -- or have you prepared to capitalize when something goes right.

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