Small Businesses Optimistic for 2011 but Still Face Challenges To Growth
by Rob Delaney
Following the trend of the rebounding U.S. economy, a recent Citibank survey showed that small business owners in Chicago are optimistic about the year ahead. The survey found that 50 percent of businesses think 2011 would be better than 2010 and 36 percent claim it will be the same.
That optimism certainly reflects the resilience and determination of the small business sector. Resilience is not naivety though, and entrepreneurs admit there will be many challenges in the coming year. For instance, a significant majority of entrepreneurs say they expect to see rising costs in 2011, from more taxes (84 percent), rising healthcare costs (77 percent), or increasing costs for borrowing.
But rather than face these costs by laying off employees or shrinking their businesses, entrepreneurs are doing more with less. Over 50 percent of businesses polled say they would either work longer hours or begin to offer new products or services. Only 8 percent say they will cut jobs in the coming year.
Of course, with business owners’ outlook improving and the economy stabilizing, one might guess that lending will get easier. But the major obstacle to small business growth is still an extremely strict lending market.
In fact, a recent report from the Federal Reserve showed that only 10% of commercial banks had eased restrictions for small business lending since the onset of the financial crisis. And while the overall tone of the report was upbeat about business lending , a recent article in “The Street” notes that the expansion of credit for small businesses is concentrated at the top.
For the moment, business owners should consider their options wisely, and if expansion is in the offing, recognize that commercial lenders aren’t their only choice. ACCION Chicago has expanded lending 70% since the beginning of the financial crisis and anticipates the trend continuing in 2011.