Small Matters: Small business owners' optimism rises

The good news is that optimism among small business owners has risen for six months in a row, according to the National Federation of Independent Business (NFIB). The bad news is that it is still slightly lower than it was a year ago.

Consumer optimism also slipped according to the University of Michigan. Consumer spending, 70 percent of our economy, determines how quickly the economy can rebound.

I discussed the prospects for the economy and our region over breakfast recently with Joseph Wakim. Wakim is an entrepreneur and restaurant owner in Bala Cynwyd. His most recent project is a new pet clinic, with Dr. Ken Sadanaga of the Mid-Atlantic Veterinary Specialists, that is under construction and scheduled to open in July. Very high-tech.

The construction jobs for projects like this are welcome, and the new jobs at the clinic will be a permanent addition. Wakim's daily activity is greeting customers at his restaurant, Aldar Bistro. He employs about 80 people but, like most small business owners, he doesn't plan on hiring more workers any time soon since he does not expect business to pick up enough to require it.

For the general economy, he expects business conditions to remain unchanged. "It can't get much worse," he says.

Is now a good time to expand? Eight percent nationally think so, a low figure. Wakim is among the optimists: Because costs are low now, it's a good time to build the clinic. But for the rest of his businesses, the answer is: No, prospects for sales growth don't justify it. Most business owners agree that the outlook for sales growth is not good. There have been some seasonal improvements, but no trend improvements.

Credit conditions are favorable; interest rates are very low. Obtaining credit is not a problem for projects with good prospects and a solid business plan.

What's the most important problem facing Wakim's business? His first response was "weak sales" (22 percent nationally agree). On reflection, he said "red tape": Too many forms to fill out, too much mail from agencies requiring his response.

"I don't have an HR or legal department," he says. "It's very expensive to get outside professional help for all this stuff. A lot of it has nothing to do with my business really, but I have to respond."

Nationally, 21 percent agree that even in today's weak economy, this is their top problem. Another 21 percent cite taxes as the top problem.

"There is too much uncertainty about everything: taxes, labor costs, health care, the stock market, the debt situation," says Wakim. His view is widely shared by business owners, and uncertainty keeps many owners from betting on expansion.

For those who see opportunity, low costs make it a good time to grow.

Bill Dunkelberg is a professor of economics at Temple University and a nationally recognized expert on small business. Contact him at dunk@temple.edu. Read more of his columns at www.philly.com/dunkelberg