As elected officials at all levels of government toil over a solution to persistently high unemployment levels and stagnant economic growth, Westchester business owners have a message for them: “We”™re waiting on you.”
The Business Council of Westchester Business Confidence Index, a quarterly survey of business owners in Westchester County, plummeted 37 percent for the third quarter of 2011.
The index, which has been compiled by Mount Kisco-based management consulting firm DataKey Consulting L.L.C. each quarter starting in the fourth quarter of 2008, rates confidence among Westchester”™s business owners on a scale from one to 100, with a 50 rating indicating an equal amount of optimism and pessimism.
The third quarter rating fell to 41.6, down from the index”™s high-water mark of 66.3 during the second quarter of 2011.
Prior to the current quarter, there had been five consecutive quarters of increasing confidence levels. The current reading of 41.6 represents just the second time the index has fallen below 50 since the third quarter of 2009, when it was at 41.2. When the index debuted in the fourth quarter of 2008, it was at 27.
“There is a lot of uncertainty out there,” said Marsha Gordon, president and CEO of the Business Council of Westchester. “There is great uncertainty around the national economy and that”™s where we”™re seeing these numbers reflected.”
With companies starting to approach their respective budgeting processes for 2012 as the fourth quarter begins, Gordon said the primary goal will likely be to maintain rather than to make major capital investments at the present.
“It”™s budget time right now and we”™re saying, ”˜What are our expenses just to run the business?”™” she said.
The index took into account factors such as the amount of hiring, capital expenditures, budgets, projected profits and how a company performed relative to the last quarter and over the last year, said Ted Miller, founder and president of DataKey Consulting.
Responses from just over 100 Westchester business owners were included in the index, which makes the distinction between small, medium, and large companies. About 75 percent of the responses came from small and mid-size companies, which are classified by DataKey as having up to 30 employees and between 30 and 300 employees, respectively. Large companies, or those with more than 300 employees, comprised the remaining 25 percent of the responses.
Responses for the third-quarter index were collected during the week of Sept. 12th, after which DataKey compiled and analyzed the data.
Miller stressed that reading represented just one quarter”™s worth of data and did not signify a trend, but that it was discouraging nonetheless.
“One point does not define a trend ”¦ (but) it is such a significant drop that it does merit comment. There is a tremendous amount of volatility and uncertainty in the economy,” Miller said. “The uncertainty then drives confidence within companies.”
In one positive reading, Miller said that confidence was higher among small business owners. In Westchester County, small businesses account for roughly 70 percent of the total firms.
“The smaller companies are more optimistic,” Miller said, pointing to the flexibility that a business with only several employees has versus a company with hundreds of employees.
“They”™re a little bit more optimistic and they”™re definitely more nimble ”¦ If they can aggressively market they can jump into new arenas very quickly ”“ they”™re very nimble like that,” he said.
Miller was careful to differentiate between the Westchester Business Confidence Index and measures of consumer confidence, the latter of which being specific to consumers and the former to business owners. However, he did say that when compared with consumer confidence indexes that are compiled by the likes of the University of Michigan and Bloomberg, the Westchester Business Confidence Index saw a similar percentage drop during the third quarter.
The news is not all bad, Gordon said, stressing that where there is currently uncertainty there is also opportunity.
“We are seeing all kinds of possibilities within Westchester and the region,” she said.
In the Mid-Hudson Regional Economic Development Council, where Gordon serves as a representative, there is a working group focused on small business and another focused on various industry clusters. “We”™ve asked each one of the clusters to examine the small businesses in their cluster” in hopes of stimulating growth.
Wiley C. Harrison, president of Business of Your Business L.L.C., a White Plains-based consulting firm, said government-backed incentives for businesses to expand are not always directed toward those that most need the aid.
“A lot of effort is being done with the regional councils, with the IDAs and some of the other government programs that try to incentivize businesses to relocate here with jobs, but a lot of these incentives go to a particular set of employees that are not the current unemployed,” said Harrison, who also serves as a representative on the Mid-Hudson Regional Council.
“These individuals are the uneducated individuals, those 65 and older, the disabled, and the minorities ”“ these people are most likely and historically have been hired by employers with 50 or less employees,” he said. “So I think we need to bridge that gap between who is unemployed and who will most likely hire these people.”
