Recession? Small Businesses are Prepared, a Survey Says

Should the U.S. economy’s long-running expansion eventually slide into a recession, many small business owners believe they have positioned themselves to be able to ride it out, a survey shows.

A poll of 500 entrepreneurs across the country by Kabbage, an Atlanta-based online lender to small business, found that 80% have taken steps to insulate themselves in case the economy turns down.

"Despite the growing fears of economists and Wall Street, entrepreneurs are ready to rise to the challenge,” Laura Goldberg, Kabbage’s chief revenue officer, said in statement.

According to the survey, a third said they are expanding their customer base, securing more contracts or expanding sales to increase cash flow. Some 21% said they plan to launch new products or services to increase revenue.

Actions to reduce costs fell into much smaller percentages. Only 8% reported they were reducing operational expenses to build cash reserves, or postponing expansion plans, which could mean cutting back on real estate.

Still, many entrepreneurs said they had been running a tighter ship since the recession, wary of what might come. In one anecdote cited by Kabbage, a California retailer said its industry was affected by the 2008 meltdown, and "we run our business from that experience.”

Though they are confident in their stability, they anticipate an economic slowdown coming. That runs counter to the most recent quarterly survey of small businesses by the National Federation of Independent Business. Small business optimism neared historic highs, jumping to levels last seen before the longest government shutdown in history earlier this year, a 35-day spell that ended in January.

“Small business owners are demonstrating a continued confidence in the strength of the economy and are betting capital spending dollars on it,” William Dunkelberg, NFIB’s chief economist, said in a statement accompanyng that report.