Companies, like people, can feel under the weather — especially when economic conditions are cloudy. Fortunately, the majority of small businesses today have a sunny disposition — giving themselves high marks for health when it comes to operations and cash flow.
The latest quarterly Small Business Index (Q2 2019) results from MetLife and the U.S. Chamber of Commerce indicate that two out of three (65%) small businesses report being in good health — consistent with Q1 findings. Those in operation from 11 to 20 years are slightly more optimistic about their business health (71%) than small companies open at least 20 years (64%) and those open less than 10 years (62%). The smaller the business, however, the less likely they are to believe they’re in good health. Broken down by sectors, manufacturers are more upbeat than last quarter, with 66% reporting good health (up from 61% last quarter); while retailers continue to be less optimistic.
Comfort with cash flow remains high, too (83%), with all four regions polled (South, West, Northeast, and Midwest) revealing steady cash flow comfort levels; 39% of Midwestern entrepreneurs, in fact, register being very comfortable with cash flow — up from previous quarters. Additionally, most small companies report consistent levels of staffing in the second quarter, with less staff reduction than hiring (11% vs. 18%, respectively); seven in 10 say they’ve kept the same roster over the past year, comparable to a year ago (68%).
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Entrepreneurs concur that current business conditions are increasingly favorable overall, helping to explain heightened optimism about cash and operations.
“It’s an excellent time to be in business,” said Lexi Montgomery, owner of The Darling Company. “Tech is rapidly expanding, and there are lots of contract opportunities for those who don’t want traditional 9-to-5 jobs. Plus, because people have a lot of freedom to make decisions, and subliminal marketing has become quite advanced — people are spending a lot more money. The market is good for everyone, especially business owners and first-world consumers.”
Eric Axelrod, president and chief architect of DIGR, echoed these thoughts.
“The overall strength of the economy is a big driver of perception,” he said. “Small manufacturers are especially optimistic because consumer spending is on the rise. The shift to ecommerce and away from wholesale toward direct-to-consumer is helping most of them in the short term as brick-and-mortar sales continue to move to online sales.”
[Read: How to create a business development strategy.]
The overall strength of the economy is a big driver of perception.
Eric Axelrod, president and chief architect of DIGR
Calloway Cook, owner/founder of Illuminate Labs, agreed that improved technological capabilities are fueling much of the operational confidence expressed by small business owners.
“The digital age has allowed for online-only businesses to staff fewer employees and increase profit margins by increasing efficiency and specialization while reducing physical overhead,” said Cook, who is the sole staffer at his company and has no plans to recruit help anytime soon.
By contrast, it’s easy to see why retailers are less hopeful.
“The ongoing shift to e-commerce is hurting many small retailers. Most don’t know how to compete in the online world, although many are in an excellent position to do so with established supplier relationships, facilities which could be used for fulfillment, and staff who could complete online orders,” Axelrod added.
[Read: How to create a cash flow statement.]
Montgomery rates her company and cash flow as being in good health three years after launch.
“We’ve seen consistent growth each year, and I’m optimistic about our prospects looking ahead because we have low overhead,” she said. “The market is also welcoming more women, minorities, and alternative tech concepts — all of which directly benefit our business model.”
With his company booming, Axelrod has been hiring more over the past year to keep up with customer demand for his services.
“My small business and cash flow are definitely healthy,” said Axelrod.
Cook, meanwhile, admitted to being “relatively comfortable” with his financial position.
“We have expenses and no income at the moment, but we have zero debt and we’ll be launching and taking in revenue in less than a month,” said Cook. “We plan to grow the business by reinvesting profits rather than leveraging debt.”
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