A couple of weeks ago, a headline read that a recent survey found small businesses optimistic about their own businesses but not about the economy. Intriguing—but a bit of a contradiction? There were other studies that said small businesses are not hiring, that small business credit is down, and that small business credit is up.
Day in, day out we’re subjected to a continual stream of information, commentary, prognostication and interpretation about the U.S. economy, the world economy, unemployment, the housing market, various business indexes, the gyrations of the stock market. On any given day or week, we can be up or down or in a holding pattern, or waiting for a Senate vote or the release of the latest jobs or manufacturing report.
During the depths of the recession and as we’ve slowly clawed ourselves out of it, there seems to have been more than the usual amount of focus on this roller coaster ride of business data and surveys and polls coming from numerous sources. After a while, we’ve absorbed so much of this information, we find ourselves relying on it as a barometer of how we’re going to feel about things that week or even that day. Desperate for good news, we grab on to anything that indicates positive results, regardless of how narrow or tentative the foundation.
That’s not to say that surveys and studies can’t be useful; they can be. But with so many of them and with results being reported so frequently, we have to question what value these surveys actually bring. How do we interpret the results? What do they mean for the longer-term big picture? It’s important to apply some critical thinking to the results.
There’s a lot of variability among what we call small businesses. They vary enormously by size—number of employees, revenues—by sector, by geography and in countless other ways. In fact, recovery varies, too, with business sector and geography being key factors – and a lot of the surveys that publish quarterly results don’t specify these. But in our anxious minds, we’ve assigned small businesses the bellwether role of showing us how the economy is doing. The reality is that small businesses are just one factor in the economy but not necessarily the driver we want them to be.
How should we look at small business surveys? At best, they’re probably indicators of what some small business owners are thinking at a particular point in time. Most do not represent trends unless they’re based on broader data and longer periods of time and tend to point in the same direction for more than a quarter.
But it’s easy to see why we go back to them, time and time again. As a country, we believe in small businesses; we want them to do well and succeed.
Contributor Scott Shane summed this up well in a recent opinion piece on entrepreneur.com, Why Americans Love Small Business. Ironically, Shane cites a Public Affairs Council poll that says not only do the vast majority of Americans view small business favorably, nearly 70 percent of us would rather pay more to do business with a small business. More research—a Pew study—says we perceive small businesses more positively than churches and universities!
Shane offers reasons a number of reasons for our beliefs:
- Small businesses represent the American dream. We like stories of risk takers and “Go get ‘em!”
- We like thinking that small businesses grow into big companies. True, big companies started small, but relatively few small businesses grow to this extent.
- We like the “David and Goliath” nature of small businesses. We root for the underdog, the little guy that’s facing incredible odds.
- We see small business owners as honest and ethical. Compared to how many Americans view CEOs of large companies, small business owners are saints!
- We think small businesses support the middle class. Not entirely accurate, but we’re all feeling some nostalgia for a time when the middle class was strong.
Even though we’ve created a whole mythology about small businesses, there’s no question that they play an important role in the U.S. economy and psyche. Small businesses are a uniquely American story—maybe one of the few that unites us, despite our differences.
Image courtesy of Grant Cochrane / FreeDigitalPhotos.net