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Survey: Small biz sees full recovery late in 2011

Small-business owners’ expectations of an economic rebound have been pushed out until the second half of 2011, despite improving indicators within their own businesses, according to the most recent Business Confidence Survey released by a provider of human-resources services for small- and medium-sized businesses. Only 21% expect a rebound before mid-2011, while 47% anticipate a recovery in the last six months of next year and 32% are unsure.

Business-owner sentiment was somewhat of a contrast to the actual compensation data from Administaff’s base of more than 5,700 small- and medium-sized businesses. Average compensation was up 3.2% compared with the third quarter of 2009, and bonuses were up 14.9%. Commissions increased 8.1% compared with a less than 1% gain in July. Overtime pay at 8.9% of regular pay was up from 8.1% in the previous quarter and from 7.5% in April, but it was still under the 10% level that often prompts a need for additional employees.

“Owners and managers of small- and medium-sized businesses are seeing signs of improvement in sales, but remain cautious in their economic expectations,” said Paul J. Sarvadi, Administaff’s chairman and chief executive officer. “However, many have hopes the election results may lead to a more favorable business climate and increased predictability for their businesses.”

Once again, the economy was listed as the leading short-term concern — by 77% of business owners, followed by 56% citing government health-care reform, 54% specifying rising health-care costs and 37% listing controlling operating costs. For the longer term, the top responses were very close, with 69% saying they were either very concerned or had elevated concerns about potential tax increases, 67% listed government expansion and the effect on business, 66% designated the economy and 65% cited the federal deficit and the total national debt.

When asked about their pipelines for new business for the balance of 2010, 38% of survey respondents said that they expect a sales increase; 43% predicted it would stay the same; 12% anticipated decreasing sales; and 7% were unsure.

In addition, 67% of owners and managers of small- and medium-sized businesses said they are either meeting or exceeding their 2010 performance plans. That compared with 72% in the previous survey, while the remaining 33% reported that they are doing worse than expected.

In the survey conducted Oct. 19-21, when asked how they are managing the number of company employees, 67% of respondents stated that they are maintaining current staffing levels, 24% are adding new positions, and, like during the previous quarter, 9% are laying off employees.

The survey also found that 54% of participants expected to maintain employee compensation at current levels throughout 2010, 26% planned increases, 1% expected decreases and 19% were unsure.

Concerning their current profit-generating activities, 70% of participants listed selling new accounts as the leading strategy, identical to the 70% response rate in the previous period. This was followed by 65% again naming increased service to clients, 44% said they were adding new services or products, while 31% of survey respondents listed negotiating with vendors, and 25% named investing in new improvements as fifth.

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