Is the Economy Killing Small Business?

Small food-and-beverage sellers show plenty of resilience.

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As I've written about previously, no one has quite figured out just to what extent the broader problems in the economy are affecting small businesses. That's why it's important to pay attention when news like this comes out:

More owners and managers of small food and beverage businesses indicated, during the first quarter of 2008, that they are planning to increase hiring during the next 12 months and expect an increase in employees versus their 2007 statistics, according to the latest Small Business Research Board (SBRB) study released here [Buffalo Grove, Ill.] today. . . . Of the owners and managers responding to the nationwide quarterly SBRB poll cosponsored by International Profit Associates, 44 percent said they plan to increase hiring over the next 12 months. This was an increase of 28 points from the 16 percent who said, during the fourth quarter of 2007, that they were planning to increase hiring. Concerning the total number of employees, 41 percent of the respondents expect their statistics in 2008 to increase from 2007. Only 8 percent thought they would have fewer employees in the coming year.

These businesses might be benefiting from higher food prices. But the hiring news can only be encouraging.

While we're at it, let's take a quick look back at the evidence regarding small business in general, not just one specific industry. Since we're nearing the end of the month, pretty soon we'll be seeing reports about what small-business people really feel about the economy in the month of May, so it's worth looking at the overall state of their optimism (or pessimism) before we move on.

Opinion Research Corp. released a poll earlier this month that found that 88 percent of small-business people think that the economic problems will pass and their businesses will do well in the future. The downside was that two thirds said they were feeling harm to their businesses because of the bad economy.

The National Federation of Independent Business's Small Business Trends released last week had some interesting statistics: The Optimism Index bounced back from 89.6, its lowest score ever, to 91.5. Still, that's lower than any level of optimism recorded by NFIB's survey in at least the last five years. Another small positive sign: The number of small-business people who think that their business conditions will get worse over the next six months fell from 1 in 4 in March to 1 in 10.