At this mid-point in the calendar year, it might be a good time to “take the pulse” of small businesses in America. When the Arthur Andersen consulting group and National Small Business United (NSBU), which is the oldest such advocacy organization, did that it turned up some encouraging results.

Almost two out of three (61 percent) respondents to a nationwide survey of small and mid-sized business owners believe that the economy will continue to expand on through all of year 2000. This is nearly double the findings reported in a similar polling in 1998.

Just 32 percent of those questioned expect a flat economy, down from 58 percent two years ago. By simple arithmetic we can see the doom-sayers – those who think that we’re headed for a slide – total only 7 percent.

“This is the highest level of optimism we have seen in three years,” said Nancy Pechloff, managing director of Andersen’s Emerging Company Services practice.

We business owners (as represented by this sample) expect that our own firms will be able to produce gains this year in both revenue and profits. When would we ever predict otherwise?

“Entrepreneurs are natural optimists,” noted John Hexter, chairman of NSBU. “Past surveys have always shown that they are always more optimistic about their own fortunes than for the country as a whole. This year, however, small business owners feel just as strongly about the country’s prospects as their own.”

Perhaps Alan Greenspan and his gang were right. Maybe a slight “cooling down” by raising interest rates was in order, though the dose of medicine itself made some industries (construction, lending, building products) a little ill themselves.

The continued strong South Sound economic picture likely means there will be even more battles to find – and keep – qualified employees in the months ahead. More than one quarter of respondents to this survey say the number of people they employ has grown in the past year.

To keep up with the competitive job market, 61 percent say they are paying more in employee compensation. About half offer health or medical insurance, 41 percent allow flex-hours, 28 percent offer retirement planning and 401(k)-type programs. Telecommuting or being able to work regularly from home is something that employees in 16 percent of firms enjoy.

“Small and mid-sized business owners know talented people are their most valuable resource and recognize that this resources is scarce,” Pechloff said. “The tight job market is a thorn in the side in the midst of this environment of optimism.”

More so than in the past, employees today are seeking work positions that are motivating and offer more benefits. Many owners contend that they motivate their workers by providing a team atmosphere, while about the same number do so more by providing monetary rewards.

Fifty-three percent of companies report that they provide opportunities for individual to pursue self-development. Only 15 percent, however, offer their employees a stake in the company as an inspirational force to gain profitable outcomes.

“Owners are looking for new ways to fuel the expansion” that they expect and need to live up to their optimism, the consultant said, “and the Internet is at the top of their lists.”

Exactly half of all owners of small and mid-sized surveyed in June predict they will use the Internet to growth their top and bottom lines, up from 33 percent only two years ago. Other strategies expected to add to growth are: strategic alliances (21 percent), acquisition (14 percent), outsourcing (13 percent), international expansion (13 percent), joint venture (11 percent) and mergers (5 percent). Just eight percent anticipate that investment in research and development will be a driving force to their company’s growth in the year ahead.

“They are embracing the benefits of technology and are optimistic about what it can do for them,” Pechloff said. But they don’t seem to have the stomach or the resources for taking that longer path toward growth through R&D.

Despite (or perhaps, until) the recent rounds of interest rate hikes, three out of four business owners surveyed by this study have been able to find adequate financing for their needs. The smallest firms, those with zero to five employees, are less likely to have access to capital.

And for the second year in a row, credit cards continue to be the most popular method for financing among smaller and mid-sized businesses. Half of all those responding use plastic cash, while 43 percent rely on commercial bank loans.

Of those using credit cards, one in five has two to three different accounts to finance their business needs. And only 36 percent of them pay off the full balance each month. Sixty-four percent cover day-to-day expenses with their credit cards and 46 percent use them to finance large capital outlays.

“If smaller businesses are to continue to lead our economic growth, we must find ways to level the employee benefits playing field,” said NSBU’s Hexter, “especially healthcare.”

Another round of medical insurance premium jumps has the attention business owners, half of whom say healthcare reform is the most important issue needing urgent government action. Tax reform, as an issue, is cited slightly less often.

By Jeff Rounce, Business Examiner staff