Entrepreneur magazine's survey of small business owners found that 25 percent of respondents cut costs by making layoffs, 11 percent reduced work hours and 9 percent relied on attrition to reduce staff.

An additional 16 percent targeted benefits expenses by reducing healthcare costs and suspending - or terminating - 401(k) contributions.

Yet small business owners were still not out of the cost-cutting woods - cash flow, credit availability and health care costs were listed as the top challenges for small business owners as well as the small business community as a whole.

Despite capital concerns and negative financial news, for small business owners the year has been going relatively well.

The survey found that 42 percent of small business owners believe they did not do as badly as they could have in the past six months, while 25 percent said they did "surprisingly well."

In addition, small business owners leaned toward an optimistic outlook about the rest of the year's economic conditions - 36 percent were moderately optimistic, 37 percent were optimistic, and 26 percent were pessimistic.

These optimism levels may actually help improve the economy, according to recent research by Nielsen; the study suggested that positive news about the recession correlates to an increase in consumer purchasing.