This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Workers Take the Hit for Struggling Small Biz

Small businesses' profit margins may be increasing, according to data from financial analysis software company Sageworks, but this isn't exactly good news.

The company's latest figures show that while profit margins increased by 5.13% over this time last year, sales are down by 6.46%. This means, according to Drew White, chief financial officer of Sageworks, that a small business' success is being driven by expense containment, not revenue.

"Small businesses have to work very hard to make a profit," White says. "They have to carefully manage expenses if they want to stay in business."

Sageworks aggregates small-business industry data from the CPAs and accountants in its subscriber base. The accountants, in turn, use the benchmarking data to compare their own clients to industry peers. Financial data from more than 233,000 companies was used to compile the latest figures.

According to White, businesses saved the most by cutting payroll, spending 13.87% of their profits on staffing as opposed to the 14.15% they spent last year and the 16.73% spent in 2008.

"Essentially, these businesses are running short-staffed to get by," White says.

Payroll isn't the only place where businesses are penny-pinching. A separate study conducted by Office Depot (ODP) shows that 38% of the businesses surveyed have compensated for the economic downturn by limiting business travel. Those cutting advertising/marketing expenditures comprised 29%, while 22% are outsourcing fewer jobs.

Meanwhile, 55% of the business employees surveyed reported that they have yet to see an increase in sales.

"Small-business owners are still feeling their way through the current economic conditions, particularly in their business and personal lives," Steve Odland, chairman and CEO of Office Depot said in a press release.

Office Depot got the data by interviewing 1,004 employees from small- and medium-sized businesses (companies with one to 99 employees) during July.

This grim reality supports earlier data collected by the National Federation of Independent Business that showed small-businesses owners today have a more negative view of the economy than they have at any point in the past four months.

>To submit a news tip, send an email to: tips@thestreet.com.

RELATED STORIES:



Follow TheStreet.com on Twitter and become a fan on Facebook.

Stock quotes in this article: ODP 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs