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Small business optimism takes a hit

Date posted:  10/28/14 09:30:00 AM Small business optimism took a hit in September.

The future isn't bright, according to the nation's small business owners. Optimism from small businesses fell in September as entrepreneurs and owners expected profits and sales to fall in the coming months, according to a report from the National Federation of Independent Business.

Owners were also worried about filling job openings and tightening credit standards. Roughly 50 percent of the owners surveyed said they had hired or tried to add to their workforce in the last three months, but 42 percent admitted having a difficult time trying to find qualified candidates.

"A decline in job openings and capital spending plans were primarily responsible for September's index decline," said William Dunkelberg, NFIB chief economist. "Overall, small business owners are still stuck in a rut that has been difficult to escape."

The Small Business Optimism Index dropped 0.8 points to 95.3, which is five points less than where it was before the start of the Great Recession in 2007.

Small businesses can't find the throttle
Six of the index's 10 sections took a dip for the worse in a survey of 608 randomly-selected small business owners.

"Small businesses just can't seem to get out of second gear," Dunkelberg said. "In order for the Index to get back to the average, responses to the 10 Index component questions would have to improve 50 percentage points cumulatively. That's a lot of 'positive' responses to makeup to get back to 'average' much less reach a level that means a solid recovery."

But it's not all doom and gloom. A growing number of business owners thought it was a good time to increase the size of their firms and expect the overall landscape to improve in the next six months.

Business owners added an average of 0.24 workers per company in September on a seasonally adjusted basis. That is an upgrade of 0.02 workers from the previous month's average.

Tough credit standards
While 28 percent of those surveyed said all of their credit needs were met, six percent of owners said all their credit needs were not met, according to the NFIB report. That's up two points from the historic low.

Additionally, 51 percent of business owners said they did not want a loan, and only two percent revealed that financing was their biggest concern. The largest problems business owners experienced stem from taxes, regulations and weak sales.

Twenty-two percent of respondents said regulations were the biggest problem, while 21 percent claimed taxes and 14 percent cited weak sales as reasons for concern.

The percentage of business owners expecting credit conditions to improve through the rest of the year was a seasonally adjusted negative seven percent, which is two points worse than the previous month.

The NFIB stated low interest rates have not spurred any growth in spending that would help a company's cash flow. Loan demand has remained relatively sparse for business owners.

Preparing for the winter
Small businesses are also starting to gear up for another harsh winter after many had to close doors last season because of temperamental weather.

"We ended up losing a ton of money last year," Jeff Oddo, president of City Wide Maintenance, told The Associated Press.
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Oddo's company has 40 offices around the nation, all of which manage industrial and commercial properties.

But the weather wasn't all bad news for business owners. Ventures such as gyms and auto body shops saw an increase in sales due to the cold conditions, according to the AP.

Armistead Whitney, CEO of the consulting firm Preparis, told the AP his company notched a near 30 percent increase in demand for severe weather and disaster planning services.