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Confidence--and Some Mixed Signals--from Entrepreneurs

Mark Marich

When we last checked in on the confidence level of entrepreneurs, most saw higher profits in their immediate future despite the fact that there was a considerable amount of uncertainty with the overall economic outlook for the next 12 months. Those numbers remain largely the same with the results in from the latest Startup Confidence Index from the Kauffman Foundation and LegalZoom.

Eighty-two percent are confident or very confident that their businesses will be more profitable in the next 12 months than they are today, a minor 1 percent increase from the 81 percent confidence expressed in January’s survey.

However, there were also some mixed signals from respondents.

  • One-third said they plan to hire additional staff in 2012 – a 5 percent increase over the Q1 survey – but the number of respondents who expect deteriorating consumer demand rose by 2 percent (from 25 percent to 27 percent).
  • Those who believe the economy will improve or stay the same (63 percent) dropped by 3 percent, but the expectation that it will “improve significantly” climbed by 2 percent.
  • Despite stable confidence, the number of new business owners who applied for loans or lines of credit in the last year dropped from 20 percent in the first quarter survey to 16 percent in the most recent survey.
“Although the survey involves self-responses and may not be scientific, it nonetheless has important implications”, said Robert Litan, vice president of research and policy at the Kauffman Foundation.

“These mixed signals – particularly the decrease in the expectation of consumer demand – likely are attributable to escalating gas prices,” Litan said. “It seems clear that entrepreneurs, who remain confident about their companies’ abilities to achieve profitability, are counting on themselves first and foremost to push the economy back to health.”

The next survey will be released in July 2012.

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