The last few years have provided a bit of uncertainty for small business owners. However, even though the economy still has some way to go before it’s completely recovered, the silver lining might be emerging right now for small businesses.
If you managed to hang on since the Great Recession, you might be in line for a turnaround.
Brendan Ross, with Direct Lending Investments, LLC, believes that there are three reasons for small business owners to feel optimistic about a small business recovery:
1. Increased Consumer Confidence
Overall, consumer confidence has increased since the end of the Great Recession. While consumer confidence ticked a little bit lower in February, the measure stands at 78.1, which isn’t too bad.
What’s more important for small business owners, though, is that better consumer confidence usually means more spending. “Confident consumers spend money locally, triggering the ‘local economic multiplier,’” says Ross. “Studies show that $100 spend locally generates $45 of secondary spending, versus $14 from money spent at big box chains.”
With better consumer confidence, small business might see an improvement in their own sales — especially since consumers might be willing to spend locally now that they feel a little bit better about the situation. “Local spending feeds on itself as neighborhood proprietors plough money back into nearby businesses,” says Ross.
2. Inexpensive Labor Market
Now is not a bad time to hire, according to Ross. He cites information from the Bureau of Labor Statistics and the St. Louis Federal Reserve that indicates that real wages remain at 2005 levels, and that more consumers are accepting part-time workers.
These developments can benefit small businesses, according to Ross, since it keeps labor costs lower, leaving more room for profit. Plus, these low labor costs mean that some small businesses can afford to hire more workers, reducing unemployment locally and providing a little more money for consumers to spend in the local economy.