RECESSION SMALL BUSINESSES
US - Small business owners in the US plan to freeze recruitment plans and reallocate their finances in preparation for any upcoming market volatility.
According to a recent Citibank survey conducted with 521 small enterprises, 83% plan to cut headcount, while 7% plan to keep the same number of employees the next year. Nine in 10 said they would start hiring if sales increase for at least two consecutive quarters. More (53%) than half said they would add new hires if the market shows more certainty in its recovery.
Most (86%) of the small companies are afraid to undergo a double-dip recession but many are somewhat ready for any economic volatility. Three quarters of them said their companies are already equipped for an upcoming crisis. Seven in 10 have altered their business operations and allocation of finances, while 64% said the adjustments they made are permanent. The changes made include lowering debts (42%), increasing cash reserves (40%), freezing headcount (34%) and putting off expansion plans (32%).
Raj Seshadri, head of Small Business Banking at Citibank, said, "Small businesses continue to feel the effects of today's uncertain business environment."
However, Seshadri added that it is a good thing businesses are adjusting according to the market situation. "So they are ready to expand and grow when conditions improve," Seshadri said.
But the business outlook is generally pessimistic due to the bad economic state. Most (76%) respondents said their companies are doing fairly or poorly. Over a quarter (28%) felt their company performance would improve over the year. Around four in 10 are expecting to see a positive growth in their businesses in the next 12 months, while 58% believe their companies would do worse or the same.
In order to tide over the downturn, most (62%) business owners said long-term client base/relationships are important. While 57% cited managing finances well, 35% felt having recession-proof products or services would be helpful.
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