1. Small companies are upbeat about their prospects this year.

A USA Today item says that small companies are expecting a robust 2005, citing the results of two reports--the recently launched Sam's Club Small Business Confidence Index and a survey by the City Business Journals Network (CBJN). The former is based upon analysis of 1,200 business purchasers, surveyed monthly by BIGresearch for Sam's Club. In June, the confidence report found...

• Almost half of the small business owners and managers surveyed were confident or very confident about chances for a strong economy over the next six months.

• 57.3% of those surveyed expect employment levels to remain the same over the next six months.

Also, CBNJ's recent survey of small and medium businesses discovered a similarly bullish outlook:

• Every leading economic indicator (optimism, spending, revenue, income, etc.) for small and medium businesses is up for the first time since 1999.

• 70% of the small businesses surveyed predicted increased revenues for 2005.

• Optimism rose dramatically this year, with fully 35% of those surveyed stating that their business prospects for this year are "a lot better."

2. Small businesses plan to increase technology spending and adoption of new technologies.

In late April, HP released a survey that revealed the primary challenges for U.S. small businesses--operations, customer relations and employee relations--as well as their plans to significantly step up technology spending and deployment.

The survey, conducted by Harris Interactive® and released in conjunction with National Small Business Week events held in Washington, D.C., polled nearly 400 small businesses nationwide in early March. It found...

• 81% plan to increase technology spending in a number of ways (for example, company Web sites, online services and Web logs) over the next two to three years.

• Small businesses that plan to increase overall technology spending anticipate doing so by 20% on average.

• 68% of those surveyed reported that they plan to adopt additional technology products in the coming year.

• Notebook computers topped the list of planned tech buys over the next year, with 36% saying they expect to add notebooks to their technology suite in that time frame.

3. Small companies are increasingly hampered by rising costs.

Things are not all rosy for small businesses, however, as they are forced to confront skyrocketing costs. In fact, a recent story from Red Nova says that rising health insurance costs are taking a toll on them, with fewer modest-sized employers able to afford it. It cited statistics from the Henry J. Kaiser Family Foundation, a Menlo Park, California-based research foundation, which says that...

• The number of businesses with less than 200 employees that offer health benefits dropped from 68% in 2001 to 63% last year.

• Since 2000, family coverage premiums have increased by 59%.

• Employer-sponsored health insurance premiums rose at about five times the rate of inflation and worker earnings last year.

Also hurting small businesses are rising fuel costs. This news item details the findings of the latest International Profit Associates Small Business Research Board (IPA SBRB) poll, which found that...

• Nearly three-quarters (72%) of the small businesses responding to the nationwide IPA SBRB poll said they are feeling the impact of rising fuel costs. This is up from the 64% who said they were being squeezed by fuel prices in a previous IPA SBRB poll released in April.

• Small business owners and managers remain split on whether to pass on the increase to their customers with 49% saying they are passing on part or all of the increase and 51% indicating they are not.

This Entrepreneur feature says that increasing costs are slowing down small-business hiring. It cites the latest quarterly report on small-business payrolls by Skokie, Illinois-based SurePayroll, which found the following...

• Year-to-date growth in the SurePayroll Hiring Index, which measures changes in small-business size, is less than one-half of one-tenth of a percentage point.

• According to Michael Alter, president of the payroll service firm, the rising costs of capital and fuel have made small employers cautious. Interest rates are double what they were one year ago, he notes, and fuel costs have soared, while business owners' ability to raise prices is limited.

• The SurePayroll Pay Index, which measures changes in average paycheck size, meanwhile found that salaries have fallen an average of 1% nationwide while year-to-date, independent contractor use has grown by 2.2%, indicating diminishing reliance on full-time employees.

Does this contradict the optimism uncovered by previously cited surveys? Perhaps. But Alter says his company's findings don't portend a crisis. "My bet is we're going to be on this plateau for a few quarters," he tells Entrepreneur. "I don't think there's anything on the horizon sending us one way or another."

4. More startups are considering offshore outsourcing.

According to several news items, offshore outsourcing is on the rise among small firms. It's even figuring into the business plans of startup companies, reports Entrepreneur. The magazine quotes Hemant Elhence, CEO of Synerzip, a Dallas-based firm that provides offshore software development services to early-stage companies. "2 out of 5 founders are now very interested in outsourcing software development offshore from Day One. Ten years ago, no startup ever thought about doing development offshore," he tells Entrepreneur.

According to the magazine feature, "outsourcing abroad appeals to startups and their financiers because it creates a near-24-hour workday--without the overtime" speeding up a product's time-to-market. Entrepreneur also cites a February 2005 USA Today study that found that nearly 40% of tech startups employ engineers, marketers and analysts in jobs created in India and other foreign countries, and many of them are doing so within the first weeks of the company's launch.

BusinessWeek also reports that more young companies are thinking of setting up shop in China, as the country's entry into the World Trade Organization and big reductions to registered capital requirements are letting them do business there. Also a plus: the large consumer market which is even more enticing now that Chinese incomes are on the rise. "We are definitely seeing both an uptick and broadening in the type of young companies moving into China," Jack Daniels, president of EastBridge Partners, a Boston and Suzhou-based consulting firm, tells BusinessWeek. "Classically, it was makers of industrial products and electronic components. Now it runs the gamut."

5. The growth in the number of women-owned small businesses continues to outpace that of all firms.

According to the U.S. Small Business Administration, the estimated growth rate in the number of women-owned firms was nearly twice that of all firms (17% vs. 9%) between 1997 and 2004. The previously mentioned survey released by HP collected responses from this fastest growing group of small business owners in the U.S. and discovered that they are seeking more than financial rewards. For women surveyed, giving back to the community (75%), teaching others (66%) and being a role model (60%) topped the list of priorities. When asked what urged them to start their own businesses, only 55% cited creating wealth.

"Women have growing economic power and influence, so it is not a surprise that women-owned businesses are on the rise," says Karen Kerrigan, president and chief executive officer, Women Entrepreneurs Inc. "The results of the survey confirm what we are seeing among the growing ranks of women entrepreneurs that are looking to adopt technology to strengthen their business."