The Hidden Risk in the Spike in Small Business Optimism

A spike in optimism is always good, right? Not always. While a spike in small business optimism is good for economic growth, there are some hidden risks.  Therefore, it is important to know these risks so they don’t impact your growth.

Spike in Small Business Optimism Leads to a Tightening Labor Market

According to the National Federation of Independent Business survey, as reported by Market Watch, nearly 2 out of every 3 small businesses are looking to hire.  The spike in small business optimism means the competition for good talent will be fierce.  In our post “3 Way to Get the Best Talent More Often”, we highlight some ways to be more competitive. They help you compete better within a tightening marketplace.

Inadequately Planning for Increased Demand

Small business makes up about ½ of the US economy.  Therefore, if there is a spike in small business optimism, there will likely be a spike in spending and demand.  If you wait until the demand hit to plan for growth, you’re already behind.  In our post “If You Don’t Plan for Growth Now, You’ll Hate Yourself Later”, we highlight some useful tips on how to prepare for growth before it hits.

A Spike in Small Business Optimism can Lull Us into Complacency

The longer the good times last, the more likely we are to believe that they will continue.  When things are going great, it’s hard to imagine them suddenly going poorly. 

The law of gravity applies to businesses.  Thus, what goes up will eventually come down.  In other words, a spike in optimism is generally follow be a drop. Whether it’s a big drop or small, none can really say, but it is always wise to have a contingency plan in place. 

You should still make the most of the upturn, but don’t fall into the complacency trap and fail to plan for the downturn.

In summary, small business optimism is generally a great thing as long as you are mindful of the challenges it can create. 

One of the best things you can do is to review your business model to ensure that it weather both the upturn while not over extending yourself.  If you need help with this, please don’t hesitate to contact us.

How has the spike in small business optimism impact you? Have you seen it? What have you done? We’d love to hear from you. Please join in the conversation.

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