When it comes to economic recovery, nearly 3 out of 4 small business owners believe the recovery will take 18 months or longer; 19 percent percent believe a recovery could happen within 12 months, and only 8 percent believe a recovery is six months away.

Fourteen percent indicate they are postponing investment, and 8 percent are postponing hiring plans because they can’t get a loan. Nine percent indicated they may need to close their businesses due to lack of credit.

"It’s not primarily the credit squeeze that is worrying small business; the clear majority of them don’t need more credit. What they are most worried about is losing customers as consumer spending contracts,” said Jim Heeger, president and CEO of PayCycle. "And, it’s clear that small business owners are hunkering down for a slow recovery that they believe will last well into 2010.”

Small Business Owners Share Survival Tactics

The survey found that small business owners are using a variety of tactics to survive the economic crisis. Some are laying off employees or turning to contract labor to save costs, some are offering new services or special discounts, many are delaying equipment purchases, and most are shaving costs from various operational line items and personal expenses.

Here’s what PayCycle customers said::

"I have cut back on everything that is unnecessary. Drive less, buy less. Question myself on every item.  Do I really need that? Change phone services, cut cable packages, cut back on contributions to SEP and IRA, cut back on overpaying mortgage, change health insurance options, change car insurance options, keep the house warmer, have kid's party at a park instead of a fancy facility,” said Lee-Anne Steinhardt, owner of TransRX in Florida.

"I have moved to a less expensive location and my husband and I have had to come out of retirement and return to work.  We also had to cut our payroll, including laying off my own daughter, a single mother.  I am almost 60 and my husband is soon to be 65 and a heart attack survivor.  You do what you have to do to get through these tough times,” commented Kathy Braatz, co-owner of KC’s Drivers School in Wisconsin.

"We are robbing Peter to pay Paul like everyone else. Pay advances are non-existent, benefits are gone and purchasing is limited to what's absolutely necessary. We're taking care of each other and hanging on to what we possess the best we can,” said Lynn Vosburgh of Vivid Ink, in Michigan.

The survey, conducted between October 17 and October 21, 2008, compiled responses from 215 small businesses.