Dropping demand rattles business owners

Mirroring the financial worries of consumers, small business owners in two separate surveys say they're feeling pessimistic. The National Federation of Independent Business, a lobbying and advocacy group, found December's “small business optimism index” to be the lowest in the survey's 35-year history. Another advocacy organization, the National Small Business Association, found only 3 percent of small business owners thought the U.S. economy will grow in 2009. That's down from 21 percent in August.

Small businesses also aren't hiring, according to the NFIB survey of 805 businesses conducted through Dec. 29. Just 8 percent of small businesses plan to hire in the next few months, and 19 percent plan to cut jobs. Lack of consumer demand means many of these businesses also feel they can't raise prices to combat the slowdown: 3 percent say they plan to raise prices.

The National Small Business Association's survey on small business owner sentiment found the number of small businesses hiring new employees dropped from 30 percent in August to just 18 percent in December. The recession also sent owners to their credit cards to fund their businesses. Almost half of owners used credit cards to finance their small businesses.