Money & Company

Tracking the market and economic trends
that shape your finances.

« Previous Post | Money & Company Home | Next Post »

Gloom but not doom among small-business owners

January 11, 2011 | 12:57 pm

Small businesses ended 2010 less gloomily than they began it -- but not by much, according to a report released Tuesday by the National Federation of Independent Business.

The organization's small-business optimism index closed the year at 92.6 for December, up from 88 in December of 2009. But positive outlooks among business owners -- based on a variety of factors including cash flow, sales and plans for hiring -- dropped slightly in December over the previous month.

Sometimes it's difficult to really understand what these indexes signify. This one is configured so that the 100 equals the level of confidence that businesses felt in 1986. To me, at least, it can sometimes make more sense to drill down and see the actual statistics that show what businesses experienced during the year.

One way to do that is to look at the amount of money that businesses earned. About 34% of the businesses surveyed by the NFIB said they earned less in December than in November and October. Yet it was still an improvement over the previous December, when 43% reported a drop in earnings. Most of the roughly 800 companies surveyed said earnings had slowed in December because of poor sales.

-- Sharon Bernstein

On Twitter: @sharonbernstein