What’s good for small business is good for the world
Recently, we learned that GDP went negative in the fourth quarter of last year. One negative growth quarter is serious since that’s half of the definition of a recession.
There are many factors contributing to this drop, but arguably the most significant are unpopular government policies, fiscal uncertainty and political unleadership that are worrying half of the U.S. economy – small businesses – a lot.
Recently, in two online polls taken a couple of weeks apart, we asked small business owners 1) What’s the likelihood of another recession? and 2) What’s your initial indication of business growth for the New Year?
On the question of a double dip recession, only four percent said, “Zero – we just had one bad quarter.” The other 96% of responses ranged from 50-50 to 75% to 100% likelihood of another recession.
There’s a concept I’ve reported on before of which we all have to be mindful: availability cascade. This is when we read and hear in the media about a possibility so much we begin to accept it as reality. An economic example would be when the media and so-called experts talk about a recession so much that we accept the hypothetical as inevitable. Availability cascade is made manifest when, as consumers and business owners, we make buying and operating decisions based on someone’s opinion rather than the facts right in front of us.
Which brings us to our second poll of small business owners about the economy: Just 11% of respondents reported good to definitely improving business conditions, with the remaining 89% ranging from no improvement yet to don’t expect improvement.
It’s not good news when 96% of the sector that is made up of the most pathologically optimistic humans on the planet thinks we have a 50% to 100% chance of another recession. And sure, you could blame availability cascade for some of this response. But when nine of ten of the same sector reports no signs yet of economic improvement, that’s rubber-meets-the-road stuff that not only shouldn’t be discounted, but actually validates the first poll.
Small business owners create over half of the U.S. economy and sign the front of over half of private paychecks. It’s not an exaggeration to say that turning this sector around alone would essentially turn around the economy. So if the political class really wants economic recovery and growth, they will stop doing what they’re doing, ask small business owners what they want, and then do that.
We’ll wait here, on Main Street, for the call.
Write this on a rock…What’s good for small business is good for the world.
Jim Blasingame is one of the world's leading experts on small business and entrepreneurship. He is the creator and award-winning host of the nationally syndicated radio program, The Small Business Advocate® Show. In addition to his weekly columns, Jim is the author of two books; Small Business is like a Bunch of Bananas and Three Minutes to Success.