Have economic times finally turned a corner? The answer is yes in the eyes of many small business owners, and more are feeling confident, according to a recent report from the National Small Business Association.
The companies surveyed are comfortable with their direction, but how can you tell if your small business is succeeding? A financial plan can be tough to stick with, but there are some quality indicators of strength and growth that a management team can utilize.
Small business owners are optimistic
The NSBA's 2013 Mid-Year Economic Report illustrated some interesting points about small businesses. Overall, the economy isn't seen as a negative, and many people are comfortable with the direction it's headed in.
In addition, 40 percent of those surveyed said the economy was in better shape now than it was five years ago, the NSBA reported. Another positive is the lack of companies predicting a recessionary economy over the next year, at its lowest total in five years as well.
One minor downside was the difference between the number of small business owners who were confident in the economy, and the number who were confident in their own future success. Odds are, the national media and various news reports about financial failures has skewed public perception, the NSBA noted.
Moreover, small businesses aren't hiring as many new employees, and economic growth is dependent upon these firms doing well. Only 18 percent reported an increase to their workforce, while 26 percent mentioned a decrease. Financial services were used by a number of companies, and 65 percent reported they received financing.
An indicator of a strong company
One possible sign that a small business is doing well is net equity, according to Forbes. The concept doesn't need to be overwhelming, and it essentially boils down to assets minus liabilities.
Assets include cash, inventory and property, among others, and subtracting items like debt and payables will get the net equity, Forbes explained. The higher the number, the better a company is doing. Net equity can provide a quick overview of a business, and illustrate how well a financial plan is working. A clear indication of a struggling venture is a number in the red.
There are two simple ways to change that number – increase assets, or reduce liabilities, and for more small business owners, a rising net equity is a very good sign.
The NSBA added that small employers make up nearly all of the firms in the U.S., and their financial success means more growth for the overall economy.