Small-Business Belts Tighten

Hiring, energy costs, cash flow, and healthcare coverage are among owners' leading concerns.

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Even in uncertain times, small-business owners tend to keep their chins up. Finding a way to scrape along when credit is tight and energy is expensive is an essential part of the entrepreneurial badge of courage. Still, a survey released this week by American Express shows just how much managers, in spite of their usual stoicism, are sweating it through the market's recent ups and downs—and staying up nights worrying about hiring, healthcare, and cash flow.

In the latest American Express Small Business Monitor, a semiannual survey released each spring and fall of more than 600 companies with fewer than 100 employees, small-business people appear to be bracing for turbulence ahead. More than 7 in 10 business owners say they have no plans to hire any full- or part-time staff in the next six months, one of the highest numbers in the past seven years. Energy costs, two years after Katrina, are easing but continue to be a major hurdle: Nearly 1 in 5 managers reports having lost sales as a result of high oil and gas prices. (That proportion is down from nearly 1 in 3 last fall.)

As credit becomes harder to find, cash flow continues to be a problem. Small-biz owners, at a rate of 1 in 4, say the cash flow issue is what "keeps them up at night." More than 1 in 5 say they are planning on tapping into their personal or private funds to keep their companies solvent.

Healthcare, meanwhile, is the 900-pound gorilla in the corner of every small business. Nearly 70 percent of small-biz owners say it's important, in spite of the high costs, to offer healthcare to employees—and 71 percent of small businesses do, according to the survey.

But managers agree on little else on the subject. Only 42 percent would support a "universal healthcare system," and just over half say they'd support a plan that would "ensure every child in the U.S. has health insurance" or provide tax credits to low-income workers to pay for their own. A surprising 38 percent agreed that an "additional tax on tobacco and alcohol" would be a good way to fund healthcare. Three out of four business owners think healthcare will continue to be a problem for the next generation of entrepreneurs. Time to tighten those belts, indeed.