Microbusiness owers still tethered by Great Recession
March 21, 2012
• Dipping into personal or retirtement funds to keep their firms alive
• ‘My customers are unwilling to commit to contracts’
America’s microbusineses – often just a single entrepreneur -- are still reeling from the negative effects of the Great Recession, according to a new survey.
And this is impacting cash flow issues for business and family, says the National Association for the Self-Employed. Three-quarters of the self-employed and micro-businesses owners say their company provides the main source of income in their household.
“Sadly, our survey re-enforces the idea that economic recovery is slow going and that 70 percent of survey respondents believe that the current state of the economy has either shown no improvement or has worsened in the last 12 months,” says Katie Vlietstra, director of government affairs for NASE. “It is also evident from our survey that our members are perplexed at what they perceive as little action by Congress to put forth common sense ideas to address key issues related to the self-employed and micro-business community.”
When asked what their business experienced in the last 12 months, respondents say that they had to refrain from making improvements or growing, have experienced a significant decrease in sales and/or revenue, and had to utilize personal savings or retirement savings to address cash flow issues.
The self-employed and micro-businesses personal finances are often intertwined with their business finances. Survey respondents say their family has been affected in the following ways in the past 12 months: increase in credit card debt, utilization of personal savings or retirement savings, difficulty affording basic needs, like housing, utilities and food.
Eighty-one percent say they’re not planning to hire full-time or part-time workers this year. When asked why, the top reason is that they had no need for additional help. Being unable to pay for the salary of an additional worker and being concerned about the current uncertainty in the economy are two other popular reasons that respondents say are why they would not hire workers this year.
Of those that are hiring, 63 percent would be looking for part-time employees.
The following responses are from are from micro-businesses regarding how they have fared in the past year:
• No credit available for operating capital contrary to government claims programs.
• I have had to file bankruptcy to keep my health insurance on myself and my employee.
• I have gone without pay.
• Selling my business is almost impossible so that I can retire.
• I took on a part time job that provides health benefits since I could no longer afford to pay for my own.
• I have experienced greater uncertainty about the status of my business. I have not been able to plan more than a few months ahead because my customers are unwilling to commit to contracts until the last minute.
The survey was available for NASE members to take in February and March. Almost 500 small business owners opted-in to the online survey and respondents were prohibited from taking it more than once.