Cost-conscious businesses keep a lid on ad spending and prepare for what many of them believe will be a lackluster holiday shopping season.
A quarterly survey of more than 12,000 midmarket companies by small business
social network MerchantCircle finds just 23 percent of merchants believe that
the worst of the recession is behind us, though only 5.7 percent expect their
businesses to fail.
The survey found that 47.3 percent of merchants disagree or strongly
disagree with the statement, "The worst effects of the recession are
behind us"; 23.2 percent of merchants believe that the worst of the
recession's effects are behind them, and 29.6 percent neither agree nor
However, 73.9 percent of merchants believe that their business will survive
the recession-5.7 percent of merchants indicate they do not expect their
business to survive and 20.4 neither agreed nor disagreed with the statement,
"My business will survive the recession." Forty-two percent of
merchants surveyed said they would not start their business again in today's
economic climate. When responses from retailers are isolated, the figure
increased by 9.2 percent, with 51.3 percent of retailers saying they would not
start their business again.
"Although recent events on Wall Street have taken an economic toll on Main
Street, small business owners are a resilient
group," said MerchantCircle Vice President Darren Waddell. "Let's not
forget that small businesses and entrepreneurs create two-thirds of all new
jobs in the U.S., and though our first merchant confidence index reveals
merchants expect to be challenged during the 2009 holiday season, they are
largely optimistic that their businesses will survive."
General outlook is poor for the 2009 holiday season, with six in 10
merchants saying they do not expect an uptick in sales revenues during the next
90 days (November through January) over the past 90 days (August through October).
Nearly seven in 10 merchants expect 2009 to rival 2008 in terms of poor sales,
and 0.1 percent of small business owners expect sales revenues to decline or
remain relatively the same over the next three months versus the last three
The majority of merchants expect employee headcount to remain flat or
decline, but nearly 15 percent of small businesses expect to ramp up hiring
over the next three months, which Waddell said represents a glimmer of hope for
job seekers. Twelve percent expect to increase their headcount "somewhat,"
and 2.1 expect to increase headcount significantly over the next three months.
However, 85.4 percent of merchants expect employee headcount to remain the same
or decline over the next three months.
Mark Fratrik, vice president at research firm BIA Kelsey, said it's not
surprising to see the apprehension of small businesses on the recovery given
the breadth and magnitude of the downturn in the past year.
"Nearly half of the respondents indicated that they do not think the worst
effects of the recession are behind us," he said. "Only when the unemployment
rate decreases and consumers start spending will these small businesses start
to become optimistic. As a result of this apprehension, these companies are
generally not expecting to hire many more people in the near future, nor are
they expecting to spend more in marketing or advertising."