Magazine article Business Credit

The New American Dream: Owning Your Own Business

Magazine article Business Credit

The New American Dream: Owning Your Own Business

Article excerpt

D&B Study Shows Small Businesses Expect to Grow in '97; Debt Levels to Decline

For many years the "American Dream" was owning a home. But with trends toward corporate downsizing, outsourcing and transient employment increasing, the "new American Dream" has become business ownership - a chance to control your own destiny. It's a dream over 42 million people in the U.S. have realized, including 8 million women and 2.1 million minorities.

For the third consecutive year, Dun & Bradstreet's Survey of Small Business finds small business owners bullish on their future prospects. The survey segmented small businesses by size and industry and included women- and minority-owned firms. Overall, 88 percent of the small business owners surveyed in December 1996 said they were optimistic about the outlook for their companies in the coming year. In addition, two-thirds of the respondents (68 percent) expect their customer base to grow in 1997. Growth trends are also anticipated for company revenue, profits and value of receivables. At the same time, few expect company debt to increase - 40 percent of those carrying debt expect it to decrease, while 38 percent expect it to stay the same (see chart).

Increasing Confidence in the Economy and Technology Cited

Optimism may be driven by the perception among small business owners that the national economy will improve over the next 12 months. Nearly three-quarters of the respondents expressed a favorable outlook for the economy, up from 50 percent last year. Another key factor may be the rising impact of technology on small businesses. Tools such as personal computers and fax machines help 80 percent of small businesses with productivity and customer service. Cellular phones (19 percent) and other telecommunications services (16 percent) were also credited as major contributors.

Securing financing does not appear to be a problem for many small business owners, even if that means obtaining a second-party to guarantee the loan or line of credit. One-third of the respondents turned to commercial loans, credit cards and personal loans in 1996.

Finding Qualified Workers Is Biggest Challenge

While small business owners envision a bright future, they also acknowledge bothersome challenges and issues, some of which are longstanding. As in previous years, the biggest challenges small businesses face are finding qualified employees (49 percent); handling increasing insurance costs (44 percent); and dealing with increasing domestic competition (30 percent). Many difficult issues for small businesses are government-related, such as regulations and high taxes (40 percent), and a changing business climate (17 percent).

The study revealed that one in two small businesses provide employee health care benefits. Most owners reported that health insurance has either increased or remained constant. To combat the rising cost of insurance, 37 percent of respondents shopped for a new carrier in 1996 (up from 21 percent in 1995) while another 41 percent assumed the extra cost without passing it on to their employees.

Retirement benefits are even more difficult to come by, the survey indicated. They're offered in only 28 percent of small businesses. However, this 28 percent represents a 50 percent improvement over 1995. Of those companies that offer such benefits, 65 percent provide all of their employees with a retirement plan, usually through a 401-K. …

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