Survey Says: Everybody's Spending, Nobody's Hiring. Why?
Spending on recreation, leisure and dining out are all on the way up, but continued economic uncertainty is keeping small businesses on the sidelines.
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I wrote on AOL Small Business last week that Americans are spending money on their passions despite the tough economy. A new survey from Sageworks backs up that finding, showing that two key "fun" spending categories -- restaurants and leisure -- are starting to bounce back. Here's a closer look at some of the latest small-business surveys.
Consumers Just Wanna Have Fun
Sageworks reports that after declining more than 2.5 percent in 2009, spending on recreation and leisure activities grew more than 4 percent this year. And spending at full-service restaurants -- an industry that was especially hard-hit by the recession -- grew by nearly 3 percent, after about a 2 percent decline last year.
These figures don't surprise me -- anecdotally, at least where I live in southern California, I'm seeing more crowds at restaurants and in the malls.
Businesses Still Feeling Scrooge-ish
Consumers aren't the only ones feeling better -- 59 percent of small businesses expect increased sales and 56 percent expect increased profits in the next six months, according to the latest Office Depot Small Business Index.
But despite that optimistic outlook, 81 percent of small businesses aren't planning to hire. Why? Well, their stated reasons include higher health-care costs (18 percent), fear of higher taxes (15 percent) and continued economic uncertainty (14 percent). But looking at the survey results, I think the real reasons are actually related to the financial industry. Sixty-three percent of respondents expect their interest rates to rise in the next six months, and 78 percent think bank loans will become even harder to obtain. Will the newly passed legislation creating a $30 billion loan fund change entrepreneurs' mindset? Maybe, but that attitude adjustment is going to take a while.
Man vs. Machine
They may not be spending on hiring, but small businesses are getting ready to invest in technology. According to the CDW IT Monitor survey, which has tracked small business IT confidence since the recession began, over one-quarter (27 percent) of IT decision makers at small companies expect their IT budgets to grow in the next six months. That's up 3 percent since the June CDW IT Monitor and 8 percent since this time last year. And 17 percent of IT decision makers at small businesses say they are more likely to implement discretionary IT projects, up 4 percent since June.
These results mimic a lot of other research I've seen that shows small and midsize companies intend to increase their capital expenditures soon -- and much of that is directed at investing in new and updated technologies.
Rieva Lesonsky is CEO of GrowBiz Media, a content and consulting company that helps entrepreneurs start and grow their businesses. Follow Rieva at Twitter.com/Rieva and visit SmallBizDaily.com to sign up for her free TrendCast reports.