We know it’s tough for businesses out there, particularly because of layoffs, intense competition and a sluggish economy. Yet entrepreneurs have created most of the 6.8 million new jobs in the U.S. since 2003 — and the trend shows few signs of abating. Here we examine small-business owners’ confidence, concerns, expectations and other small-biz trends for 2007.

We are in the midst of the largest entrepreneurial surge the United States has ever seen. Nearly 672,000 new companies with employees were created in 2005, according to Small Business Administration projections. That is the biggest business birthrate in this country’s history; that is 12 percent more startups than at the height of dot-com hysteria in 1996.

Not only are more Americans launching small businesses, but many others aspire to it: Sixty-six percent of respondents in a 2006 Yahoo Small Business and Harris Interactive survey said they wanted to start a company someday; 37 percent of those said they hoped to do so within the next five years (via Fortune). College students are signing up for entrepreneurial courses in record numbers, and over-65ers are retiring only to form their own small businesses.

U.S. entrepreneurs have created most of the 6.8 million new jobs in the nation since 2003, according to Babson College and the London Business School’s eight annual Global Entrepreneurship Monitor (GEM) study, released earlier this month.

And the trend shows no sign of abating. The Bureau of Labor Statistics found that more businesses were created in the first quarter of 2006 than during the same period the previous year.

Elsewhere, “nascent entrepreneurialism is booming,” especially in the emerging economies of India and China, according to BusinessWeek. In China, early-stage entrepreneurship rose to 16.2 percent, from 13.7 percent from last year, according to the GEM study. In Argentina, the number rose to 10.2 percent, from 9.9 percent. In China, the study found that 32 percent of the Chinese surveyed expect to start a business in the next three years. The scenario is similar in India.

The rates of entrepreneurialism and innovation in emerging economies are exploding in order to fill demand for specialized products and services from larger players.

So what are small businesses expecting in 2007, and how is it different from what should they expect?

Owners’ Confidence
Despite uneven and tepid economic growth, entrepreneurs remained optimistic at the end of 2006.

While many economists are forecasting a weaker economic environment for 2007, small-business owners are expressing no signs of an economic downturn, according to results of the latest Wells Fargo/Gallup Small Business Index, a nationwide survey of small-biz owners. “These optimistic findings indicate expectations for a rebound in activity this year, as the forces that have been inhibiting growth prospects — such as rising energy prices and interest rates, and stagnant wage growth — reverse course and begin supporting future demand,” said Dr. Scott Anderson, senior economist at Wells Fargo.

Of the respondents surveyed by the Gallup Organization, 63 percent expect revenues to increase and 75 percent expect their cash flow to be in good standing this year.

Moreover, small-biz owners expect their companies to grow at a faster clip than 2006, according to results of Administaff’s Business Confidence Survey released late last year. These executives also said they plan to increase their workforce, give raises and invest in their companies this year. Some 55 percent — the highest share in nearly three years — of small-business owners said they plan to hire one or more workers

However, while even the latest quarterly National Federation of Independent Business (NFIB) Small Business Optimism Index — regarded as a national barometer for the segment — is up, other signs point to issues to watch out for this year.

Concerns
Energy
Among the key areas of concern for all businesses has been escalating energy costs. The latest Wells Fargo/Gallup Small Business Index stated that energy headed the list of operators’ key economic concerns, with 69 percent of those surveyed weighing in on the topic. The recent NFIB survey echoed the energy concerns, but added that only 43 percent of small-biz owners have taken steps to reduce energy consumption. The report further found that 70 percent of small businesses say their biggest energy costs are related to transportation and powering of buildings.

Hiring
Although hiring appears to be on the rise, it remains an area of concern. Administaff’s survey noted the issue of retaining talented employees and finding qualified candidates to fill new positions. More than any other concern, business owners listed “hiring the right people” as a top issue, while 67 percent said they will increase their efforts to retain employees this year. To retain employees, most said they planned to review and take steps to improve compensation, incentives, bonuses and commissions. Others said they would strengthen their benefits packages. Additional retention strategies cited included the following:

• Offering training and development, as well as “job enrichment”;
• Improving communication with employees;
• Enhancing employee recognition programs;
• Improving the work environment; and
• Adding flex-time spending

Healthcare
Cost and availability of healthcare remain a major concern for small-business owners. In fact, after hiring, the rising cost of healthcare ranked as a top issue in Administaff’s survey. And rising premiums will continue to go up.

“In 2007, insurers will be offering more consumer-driven plans to small employers,” according to Gary Claxton, VP and director of Marketplace Project Kaiser Foundation, in recent BusinessWeek coverage. “Brokers will talk about plans that are connected to health savings accounts, and some companies will go this way because there is the promise of lower costs.”

In November, Congresswoman Nydia M. Vel