Even though it has been a long haul, it’s nice to see some optimism surfacing in 2013. Earlier this year, a new study “2013 Business Outlook Survey: A New Reality Of Cautious Optimism” was published by EKS&H. It shows a return to cautious optimism despite growth lower than expected in 2012, and much improved perspective from the record-high pessimism of the last few years.
According to earlier studies from Forbes Insights, many entrepreneurs not only feel the lessons learned during the past few years have helped them survive, but the recession also exposed flaws in their business strategies that were previously not apparent, and they could fix. Here are some financial planning areas of emphasis derived from multiple studies:
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Better cash flow controls. Obviously, falling income over the past years put additional pressure on small business cash flow. Some companies turned to cutbacks over boosting financial reserves. Others focused on reducing overhead and expenses, but they needed a balanced strategy, along with new lines of credit and financing.
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More focus on strategic planning. Small business owners now recognize the importance of planning amid the new economic environment and want to spend more time doing it. Only 44% indicated they had a strategy in place during the recession, or to guide growth during the coming recovery period. More work needed.
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Increased business role in US economic recovery. Small businesses now believe they have played a key role in the U.S. economic recovery, but in spite of, rather than assisted by, support from the federal government. Still, they are fighting for action, particularly for even higher Small Business Administration (SBA) loan limits.
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Increase operating efficiencies. A majority of small business leaders intend to be more aggressive in 2013 by implementing a range of actions to advance their businesses. Respondents cited a greater focus on cost cutting and efficiency as the number two step to achieving growth in 2013, only slightly behind increasing sales.
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Add new revenue streams, and more aggressive marketing. At the same time, 71% plan to spend more on digital marketing in 2013, and pursuing new revenue streams is seen as a top priority for transforming bottom line profits. Another approach is to diversify and broaden the product lines and services.
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Grab market share from competitors. A large majority of respondents acknowledged that the old way of doing business will no longer work and that they need to find new ways to take advantage of market opportunities. Many are planning to be more aggressive in grabbing market share from competitors.
These initiatives, in concert with current findings, support economists’ forecast that the U.S. economy is transitioning to a self-sustaining economic expansion in 2013-2014 that will not be derailed by the sequester, Europe’s sovereign debt problems, or the still looming U.S. fiscal cliff.
The NFIB Index of Small Business Optimism increased 1.9 points in February, to 90.8. While a nice improvement over the last several reports, the Index still remains on par with the 2008 average and below earlier troughs. The direction of February’s change is positive, but still not indicative of a real surge in confidence among small-business owners.
My take on all this is that entrepreneurs see some light at the end of the tunnel, and the light is no longer a freight train heading straight at them. We always learn more when times are tough, and we should come away with more strength and determination, as well as real results. Soak up the optimism, do some real financial planning, and push the limits on all business fronts.
Marty Zwilling
Disclosure: This blog entry sponsored by Visa Business and I received compensation for my time from Visa for sharing my views in this post, but the views expressed here are solely mine, not Visa's. Visit http://facebook.com/visasmallbiz to take a look at the reinvented Facebook Page: Well Sourced by Visa Business.
