Tough times ahead for small businesses

Staff -- Industrial Distribution, 5/1/2007

Rising interest rates, health-care costs and fuel costs spell trouble for small business owners in the Midwest, according to an executive at National City Corp., the St. Louis Business Journal reported in April.

Greg Jelinek, executive vice president of business banking for National City Corp., told a group at St. Louis University's John Cook School of Business that rising costs are expected to put a squeeze on small businesses in the region.

“The economic outlook for small-business owners has declined severely since mid-2006,” Jelinek said.

The trend is hitting small manufacturers especially hard, he said, adding that the bank's analysts predict a “much weaker outlook” for manufacturers than service industry businesses.

On the positive side, the banker cited an abundance of investment capital available to smaller outfits.

“More capital is going after fewer deals, and that's a good thing for small-business owners,” he said.

Another advantage is the relative agility of smaller enterprises, which make up 97 percent of all United States businesses, compared with larger operations, Jelinek said.

“They can outmaneuver their larger competitors,” he said. “We're seeing many small companies leapfrog over big companies because they are outsourcing their technology and aren't burdened by huge infrastructures.”

Cleveland-based National City operates banks in seven Midwest states and Florida.