Main Street's Sentiment Splits Into 2021 As Small Businesses Await More Uncertainty

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

The new year may represent a new start for some, but for America’s small businesses, 2021 brings much of the same anxieties and uncertainties they have been contending with for months now.

Credibly has worked alongside many small businesses over the course of the pandemic to help them overcome any financing challenges they’ve faced. However, according to several national surveys of small business owners, the biggest challenges may still lay ahead.

Owners Await More Pain

According to the December installment of the National Federation of Independent Businesses’ monthly index of small business sentiment, business owners were increasingly pessimistic about what the initial months of 2021 would bring in terms of new sales and potential expansion. That drop in sentiment represented a 5.5 decline from November’s reading and was the lowest end-of-year reading the index has registered since 1973.

Nevertheless, there were some signs of hope within the organization’s findings. Most notably is that businesses were increasing their payrolls in the final month of the year through hiring and raising wages.

Another indicator of small business sentiment, the quarterly Metlife & U.S. Chamber of Commerce Small Business Index, tells a slightly different story. While the index’s fourth quarter reading was still at historically low levels, it did show a slight increase in optimism over the third quarter. Key insights of this report were that businesses felt the economy was in overall better shape than the previous quarter, although they still expect more pain to come as a result of the ongoing pandemic.

Health And Politics

Among the factors influencing business sentiment was, of course, the continued influence of the global pandemic on businesses’ ability to safely operate.

But while the sentiment surveys found that business owners believed the COVID-19 pandemic would continue to impact their operations, the U.S. has since seen a marked decline in new cases, a trend that only began early in January following a steep climb in new infections through December.

While the climate surrounding the pandemic may be cause for cautious optimism, another cause for uncertainty is still playing out in the White House. Business owners are still reticent about what the newly inaugurated Biden administration will mean for them.

A CNBC-SurveyMonkey poll of small business owners that was conducted just after the results of the 2020 election found that business owners were fairly evenly split on whether or not the then-incoming Biden administration’s tax and regulatory policies would be beneficial to their bottom line. Of course, the results were divided starkly along party affiliations, so it’s hard to say whether the responses were based on actual assessment of the democratic president’s stated platform or preconceptions from either side of the political divide.

Nevertheless, Biden has recently garnered some skepticism among some small businesses for his support for raising the federal minimum wage to $15/hour, which many small business owners may see as onerous in a time when they are struggling to keep the lights on.

At the moment, it seems as though small business owners are still preparing for the worst. But, as 2021 continues to unfold, small business owners should continue to plan for a brighter future, even if the road there remains uncertain.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.