Small Business Sees Rock-Solid 2011 Economy: Citi

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Small business owners believe the worst is over for the US economy, although they still think conditions are fair or poor, according to a Citigroup survey released Wednesday.

Raj Seshadri, Citigroup's head of small business banking, told CNBC 68 percent believe the worst is over, with 53 percent saying 2011 is "steady as a rock."

"The stability is what struck us," she said. "There is optimism out there."

Citi surveyed 1,004 US businesses with revenue over $100,000 and no more than 100 employees by phone last month.

Sixty-nine percent say their business is better or about the same as a year ago while 31 percent say it is worse.

The survey also found 83 percent expect another economic downturn and 73 percent said they are prepared for it. The biggest challenges seen for small business are the cost of gas and energy (33 percent), the rising cost of raw materials (18 percent) and inflation (15 percent).

Citi also found 36 percent of small business owners polled use social networking sites such as Facebook, Twitter or LinkedIn to market their business. That figure was 19 percent a year ago.

Seshadri said the survey found small business "moving from survival mode into growth mode."

To do so 68 percent said they will increase marketing this year and 54 percent said they will offer new products and services. Of those planning to expand, 49 percent plan regional expansion, 18 percent plan national expansion and 16 percent will go global.

The survey found 19 percent plan to do more hiring compared with 74 percent who plan to keep the same number of employees. Wages have not changed, according to a majority of respondents, while 28 percent increased wages and 12 percent cut pay.