With defense contractors losing work, real estate developers facing a credit crunch and retailers scrambling for sales, it should come as no surprise that small firms in the region are getting more pessimistic about business.
In Virginia, the state Chamber of Commerce this summer conducted its annual survey of members' perceptions of economic conditions and their expectations for the coming year, and for the first time since it was begun five years ago, the poll found a majority of wholesale, retail, manufacturing, service and construction companies singing the blues.
Most notable were perceptions of slower bill collections, reduced capital expenditures and dampened expectations for revenue in the coming year.
"In the six surveys we have conducted since mid-1986, we have never seen such drastic shifts in outlook on the future of small business," Virginia Chamber President Norman G. Beatty told reporters at a news conference.
Drawing responses from 1,700 businesses in the state, the survey found positive results in 1989. Fifty-seven percent of the firms said their financial results improved from 1988, down from 62 percent reporting higher sales the year before. But the high hopes expressed in the last survey, which was conducted at the end of 1988, went unmet.
Asked what they expect business conditions in their area to be in 1991, 34 percent said they anticipated improvement, down from the 56 percent with that response at the end of 1988. The poll found that 36 percent of the businesses responding expected conditions to worsen this year, up from 9 percent the previous year.
The outlook for specific industries was as pessimistic as the outlook by region, registering the lowest numbers since the state chamber first conducted the annual survey.
In construction, every company surveyed said revenue increased in 1989. But when asked to predict 1990's figures, 47 percent said receipts would decline.
In a sign that businesses will have a harder time growing and that new enterprises will have a tougher time getting off the ground in the next year, more companies found they were being paid more slowly and had less working capital.
While 43 percent of the businesses surveyed last year said they expected the availability of working capital to increase, only 19 percent, when answering the survey this year, said that expectation had been met.
Still, 39 percent said their businesses will spend more in the coming year.
Last year, 26 percent of the respondents noted that collections on accounts receivable had slowed down; this year 39 percent had that complaint.
Hiring increased in 34 percent of businesses, down from 44 percent at the end of 1988. The percentage of businesses expecting to expand their work forces in the coming year fell to 32 percent. And with fewer jobs being created, the survey indicated, employees have become easier to find. Last year, 67 percent reported difficulties finding qualified personnel, while this year the number was down to 58 percent.
Seventeen percent of the Virginia small businesses said they have stopped offering health insurance or pension plan programs because of rising costs.
Lost business in defense contracting and a slowdown in real estate sales in Washington's suburbs gave Northern Virginia businesses the gloomiest outlook; 42 percent said they expect conditions to worsen, 28 percent said they will improve.
In southwest Virginia -- traditionally home to the most quiet segment of Virginia's economy -- 42 percent predicted improved conditions.
The typical business in the survey has fewer than 25 employees, less than $3 million in annual sales and is more than 5 years old.
The Richmond office of Price Waterhouse and the Small Business Administration helped the Virginia Chamber of Commerce conduct the survey.