3 Things You Should Know About Small Business: December 13

NEW YORK ( TheStreet) - What's happening in small business today?

1. Small-business owners make further cuts in capital spending. According to the latest Wells Fargo/Gallup Small Business Index, U.S. small-business owners are the "most pessimistic" they have been since the third quarter of 2010.

The survey, conducted November 12 to Nov.ember 16, used a random sample of 607 U.S. small-business owners.

It found the respondents have pulled back on capital spending plans since July. The net capital spending component over the past 12 months declined to -22 from -11 in July, the index showed.

Worse, the capital spending component (one of six used to compile the overall index) fell to -14 in November from -1 in July, the lowest level in more than two years, suggesting that small-business owners are likely to pull back on their business investments even more, given their negative expectations for the next 12 months.

The other five components, including hiring, revenue, financial situation, credit and cash flow, also declined during the same time period.

"The current negative net capital spending intentions mark a significant shift from the positive double-digit scores seen prior to 2008. Positive net spending intentions reflect how small-business owners usually expect to grow their businesses and take advantage of advancing technologies to help them do so. However, this has not been the case since the recession and financial crisis of 2008-2009, with net capital spending intentions reaching a low of -23 in November 2008," the survey found.

Small-business-owner capital spending expectations were slightly positive during the first two quarters of 2012, before turning neutral in July and then plunging in November, according to the index. The last time net capital spending intentions were lower than they are today was in July 2010, at -20, it says.

2. Online reviews increasingly leading to litigation. Businesses are growing more aggressive in how they respond to harsh reviews made on websites such as Yelp ( YELP) Marketwatch.

Last week, a judge ordered a woman in Washington, D.C. to remove negative and potentially defamatory statements she made about an unsatisfactory job done in her home by a contractor.

The review was quite scathing, even implying that said contractor might have stolen jewelry out of the home. Christopher Dietz, owner of contractors Dietz Development is suing the client alleging lost work opportunities and damage to his reputation, the article says.

"I'm not suing for a bad review -- I'm suing because she called me a criminal," Dietz states in the article.

Several other instances similar to Dietz's has led to litigation over poor reviews, but getting a judge to approve a defamation suit will be much more difficult, the article says. A few states have anti-SLAPP (Strategic Lawsuits Against Public Participation) statutes that "make claims for defamation much more difficult, expensive and time-consuming for a plaintiff to litigate," the article says.

3. Restaurant lessons from Hurricane Sandy. The storm of the century is estimated to have caused $62 billion in damage, maybe a quarter of that is insured losses. Six weeks after the storm, restaurant operators are realizing the importance of disaster-recovery plans, according to QSR Magazine .

"With Hurricane Sandy, everyone was assuming that we would be equally as lucky as we were with past storms," Limor Ziarno, an Edible Arrangements franchisee in Brooklyn, told QSR. "Storms feel a bit like playing Russian roulette, except this time, the bullet fired on everyone and everything in our immediate world. We were not emotionally, physically, or mentally as prepared for Sandy as we could have been."

According to a 2011 SMB Disaster Preparedness Survey, half of small- and medium-sized businesses have no disaster-recovery plan in place, even though 65% of them are in regions at risk for natural disasters, the article says. Even more disturbing, 41% said it never occurred to them to put together a plan, while 40% stated that disaster preparedness is not a priority for them.

One of the biggest pieces of preparation is having a backup place in place to process payroll should a storm take out access to payroll, experts say. Having multiple methods of communication available is also imperative, such as two-way radios, given that during Hurricane Sandy, AT&T, Verizon, T-Mobile, and Sprint all reported widespread power outages and damages to lines and towers, according to the article.

Another big issue in the aftermath of the storm - an extended period of lack of power. Owning a backup generator or emergency lighting ready is also key.

"Operators have to over-think and over-prepare to ensure that your business has everything in place ahead of time," says Frank Garrido, vice president of operations for Edible Arrangements. "Clearly understand your processes and procedures, and make sure that everyone on your team understands the plan and knows what needs to be done."

-- Written by Laurie Kulikowski in New York.

To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com.

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