Small Business Barometer Survey Shows Uptick in Sales, Profits Last Quarter

LANSING – Rebounding from a trough reached a year ago, increasing numbers of small business owners expect sales, profitability and investments to increase over the next 12 months, the latest business barometer from the Small Business Association of Michigan reports, while a larger number of employers expect to increase workforces and wages than in the last survey.

Beginning in late 2006, reports of sales increases nosedived for four consecutive quarters. But sales have now improved a little for two quarters in a row, with 23 percent of respondents reporting that their sales increased in late 2007.

The fraction reporting that their sales decreased did not change much, and at 38 percent this quarter, is only one percentage point higher than the last wave.

Profits looked slightly more positive last quarter. Nineteen percent of small business owners reported an increase in profits, not far off from the historical average of 22 percent.

Unfortunately, the outlook for investments made by small business owners into their own businesses remains very bleak. Twenty-two percent of respondents ? the highest level in the history of the Barometer ? reported that they had decreased their investment levels. For one of the few times in the 13-year record of the survey, more small business owners said they decreased investments than said they increased investments.

Looking Forward to the Next Twelve Months

Rebounding from a trough reached a year ago, increasing numbers of small business owners expect sales, profitability and investments to increase over the next 12 months.

Similarly, a larger number of employers expect to increase their number of workers and raise wages. Small business owners continue to be very positive about access to qualified personnel, with 56 percent giving a positive rating and only 16 percent a negative rating.

It Takes a Community to Help a Small Business Owner Succeed

In this wave of the survey, the Small Business Barometer collaborated with the Michigan State Housing Development Authority (MSHDA) and the Michigan Municipal League (MML) to survey Michigan entrepreneurs to determine the role ?community? plays in their success. On a scale of 1-5 (with 1 indicating it posed a big difficulty and 5 indicating that it was an immense help), ?Community Infrastructure? and ?Recruiting Quality Employees? were listed as the two top factors in helping (?Greatest Help?) businesses in the start-up phase.

As may be expected, government regulations and tax and permitting requirements were relatively less helpful factors.

Political Non-involvement is a Non-Option

In the past, many small business owners said they didn?t have time to follow the legislature or get involved in the political process. What happened in Lansing ?didn?t affect them.?

But last year?s tax hikes were like a bucket of ice water in the faces of entrepreneurs that washed away much of the apathy. Today, the small business community is riled, ?roused and raring to take action on state tax and budget issues. In this 2008 election year, lawmakers who ignore this could be at peril of losing their seats, because small business owners are extremely unhappy with Michigan?s politicians.

Sixty-one percent of small business owners gave lawmakers a negative rating for performance over the past quarter, the highest percentage of negative ratings for the performance of the Legislature in the history of the Small Business Barometer. Only 7 percent rated the performance of the legislature positively, well below the historical average.

Similarly, negative ratings for the performance of Gov. Granholm reached 70 percent this past quarter. Only 5 percent gave the governor a positive rating.

About the Small Business Barometer

This report summarizes the results of the most recent Small Business Barometer, a study that examines the small business community throughout Michigan. Through telephone interviews with Michigan small business owners, all members of the Small Business Association of Michigan (SBAM), the study tracks advance and decline in the Michigan business climate from the perspective of small business.

The January 2008 Small Business Barometer reports the results of the 56th consecutive wave of the study. Small business owners were surveyed in November and December 2007.

This column was written by Michael Rogers,