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Why The Heck Are Small Business Owners So Optimistic? The Reason May Surprise You.

The Huffington Post The Huffington Post 1/03/2016 Gene Marks
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Wow, there seems to be a lot of optimistic small business owners out there. Don't believe me? Just look at the numbers.
-Two-thirds of the 600 small business owners surveyed by Wells Fargo said their companies' financial situation is good and 71% of them said they expect their companies to be in good financial shape this year, according to a survey released this week.
-68% of "larger" small businesses (those with $20-$100 million in sales) and 43% of mid-sized companies ($5-$20 million in sales) expect international trade conditions to improve this year, according to research released last week from Western Union Business Solutions, a unit of Western Union.
-Although many small-business owners think Illinois' economy shows no signs of turning around in the upcoming year, they still hope to successfully expand and grow their businesses, according to a Chicagoland Small Business Outlook Survey report from just last month.
-In a widely reported item from the end of last year, The Hartford's Small Business Success Study found that 52% of small business owners felt optimistic about the economy strengthening this year (compared to 33% in 2011) and 73% felt that their business is operating "successfully."
-Even the National Federation of Independent Businesses had to admit that small business optimism "held up pretty well as the real economy plods forward" in their latest index this month.
What gives?
Does anyone read the news? Isn't the stock marketing tanking? Didn't we just come off a 0.7% growth in fourth quarter GDP and downward revisions for the next quarter? Didn't the IMF just reduce its growth outlook for the worldwide economy and isn't the Fed concerned about again raising interest rates due to the sluggish U.S. economy? Isn't the energy industry reeling from low oil prices, corporate profits flat-lining from slower demand and China's economy imploding?
Aren't some economists concerned that the U.S. will head into a recession in 2016? Didn't durable goods numbers significantly fall in December and manufacturing activity tumble in Philadelphia, Dallas and Kansas according to recent Federal Reserve surveys? Isn't our political system this year threatened with either socialism on one hand or fear-mongering on the other? And, most concerning, isn't Kanye West in all sorts of crazy debt?
All of this is true, and yet small business owners (with the exception, I'm assuming, of Kanye) are optimistic. Do they know something that the rest of the world doesn't? Sure, you can point to some bright spots in the economy. Retail sales were surprisingly good last month and many small businesses sell directly or indirectly to consumers. The construction and housing markets are still relatively strong and these markets provide much work to contractors and the like. And even larger companies have been steady in their output, which generates a significant amount of indirect benefits to the smaller companies that do work for them.
But that's not it. Our optimism doesn't have much to do with the economy, politics or China. All of these are important, of course. But there's another, more important factor that's figuring into why small business owners are feeling optimistic. No, it's not the return of the Walking Dead or the announcement of the next Star Wars film although both of these things definitely cheer us up. It has to do with costs. Our costs, at least for the foreseeable future, are very much under our control. And we like control. Oh yes we do.
Inflation has been a non-event for years now and no one expects any significant change in the near future. Interest rates remain at historical levels but we know that even threatened increases in 2016 will have a nominal effect on our bottom line. Oil prices, as we also know, are at rock bottom and the cost of energy has an enormous impact on our profits--from utilities in our offices and warehouses to the gas in our delivery trucks to the cost of raw materials that we buy, many which rely on petroleum based products and processes.
Pundits lament the stagnation of wages in our country over the past ten years and this is certainly a concern--but that stagnation has created a more controllable payroll situation for many employers and will likely continue for a while, even as we battle with rising costs related to mandated overtime, minimum wage, paid time off and healthcare regulations.
Thanks to cloud and mobile advancements, technology is faster, cheaper and more effective, allowing even the smallest freelancer to do business anytime from anywhere for a low monthly fee and look as if he's running a Fortune 500 company--assuming Comcast doesn't have a nationwide outage like it did earlier this week.
Tax deductions and credits to purchase capital equipment or to spend on research and development have now been made (finally) permanent. And capital, thanks to the proliferation of online lenders, crowdsourced equity and loan sites - not to mention advances from retail lenders like Staples, Square and PayPal, is readily available for just about anyone who asks and is willing to pay up to 50% interest a year (and no I'm not kidding).
This all adds up to one thing: control. No one will ever be prepared for what Kanye decides to tweet on any given day, but when it comes to our businesses we are prepared for any surprises the government or electoral system may throw at us--at least for now. Business owners hate surprises. We work hard to minimize uncertainty and to control our fate. That's why we don't work for others.
So even with all the uncertainty and challenges posed by today's economic ups and downs one big thing has been quietly happening that many small business owners have realized: our costs have become easier to control. We have a better handle on our overhead. We have learned the lessons of the last Great Recession and have reduced our expenses to the extent that we are ready for the next one.
And that's why, at least for now, we're optimistic.
A version of this blog previously appeared on

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