Poor Sales, not Tight Credit, Primary Concern for Small Businesses

Last Updated Dec 31, 2008 10:54 AM EST

A new poll conducted by the National Federation of Independent Business Research Foundation shows a quarter of small businesses fear for their survival. Since many entrepreneurs go under no matter the economic conditions, that first figure is no surprise.

But another finding of the survey, reported by Business First of Columbus, could have public policy implications.

  • Tight credit isn't the problem, rather poor sales are putting the drag on business, the owners said. About 45 percent of small-business owners cited slowing or lost sales as their biggest problem, followed by 23 percent who cited the unpredictability of business conditions.
  • Only 9 percent cited an inability to obtain credit, the same percentage that identified falling real estate values as their biggest worry.
  • "The fundamental small-business problem is the poor economy, abetted by the drop in real estate values and the nation's financial turmoil," William Dennis, who directed the poll for NFIB, said in prepared text. "Efforts to provide additional credit, whether through encouraging bank lending or government loan guarantees, are not likely to be of much help to small-business owners.
These findings seem to contradict the conventional wisdom of what is needed to help small businesses in this economy.

Do you agree that government efforts to boost credit will not have much of an effect as long as sales are low? And if so, was the argument invalid that the US government needed to bail out Wall Street in order to save the credit system for Main Street?

Share your thoughts below.