Discover(R) Small Business Watch(SM): Economic Confidence Index Plummets; More Than Half of Small Business Owners Rate Economy P
31 Marzo 2008 - 12:57PM
Business Wire
After an upward tick in February, small business owners� economic
confidence took a sharp drop in March, casting the Discover Small
Business Watch to its lowest point since its inception in August
2006. The monthly index in March was 77.8, a 13.1-point decrease
from February, and nearly 40 points lower than a year earlier.
�While the passage of the economic stimulus plan last month and Fed
rate cuts may have influenced February�s upturn, the mood is
considerably darker now, said Sastry Rachakonda, director of
Discover's business credit card. �All of the Watch�s negative data
points increased, causing the double-digit drop.� March Key
Findings: 77 percent of small business owners feel that economic
conditions in the U.S. are getting worse, an increase from 67
percent in February. 53 percent rate the U.S. economy as �poor�
compared to 36 percent who said the same in February. Only 16
percent rate the U.S. economy as �excellent� or �good.� 48 percent
of small business owners say they see economic conditions for their
businesses getting worse over the next six months, up from 34
percent in February. This is the lowest level of confidence
expressed by owners regarding their prospects during the 20 months.
47 percent say they have experienced cash flow issues over the last
90 days, a slight increase from 43 percent in February. This is the
highest we have seen since the launch of the index �Of the key
indicators in our study, temporary cash flow issues showed the
least amount of change, which generally indicates that Main Street
tends to be more consistent,� Rachakonda said. �What has seemed to
change dramatically is the way small business owners are
interpreting what they perceive in the national economic picture;
they realize it could be some time before business picks up.� When
asked which issue is most important in the 2008 election, 47
percent of small business owners cited the economy, up 12
percentage points since January. Following the economy as the most
important election issues are: immigration, 12 percent; the war in
Iraq, 11 percent; national security, 8 percent; health care, 8
percent; government ethics and corruption, 8 percent; Social
Security, 1 percent; and 4 percent were not sure. Poll: Many
Business Owners Feel Burden of Tax Preparation as Time Away from
the Business �Three out of four business owners find the
preparation and documentation process time consuming,� Rachakonda
said. �Complexity of the tax code is big distraction that takes
their focus away from building their business.� When it comes to
using an accountant or choosing do-it-yourself software, the human
touch still has the advantage: 74 percent of business owners hired
a professional, 15 percent used a software program and 9 percent
did neither. These percentages remained about the same compared to
2007. Tax Poll Highlights: 41 percent of small business owners say
it is somewhat or very difficult to find and organize the documents
they need to file their taxes. 29 percent indicated that the tax
preparation process is very time consuming and another 46 percent
find the process somewhat time consuming. 71 percent of small
business owners say that the complexity of the tax code is a
distraction from their focus on the needs of their businesses. Of
those who are expecting a tax refund this year, 44 percent of
consumers and 38 percent of small business owners say they will use
it to repay debts. Twenty-seven percent of consumers say they will
use their refund for personal use, while 19 percent of small
business owners say they will use the extra cash for business
purposes. Small business owners are more likely than consumers to
use a tax professional: 74 percent of small business owners plan to
get help, while only 58 percent of consumers said they would. 51
percent of small business owners say that tax professionals are
worth the fees they charge, compared to 41 percent of consumers who
agree. Word of mouth is a determining factor when hiring an
accountant: 54 percent of small business owners seek �someone they
know and trust,� and 26 percent more seek a �referral from friends
or relatives.� The percentages are similar among consumers, with 49
percent depending on someone they know and 25 percent taking a
referral from family and friends. �Aside from the tax insights,
this poll clearly points out the importance of word-of-mouth
advertising to small business owners,� Rachakonda said.
�Accountants, contractors, real estate brokers � all small business
owners � understand that quality of service for their current
customers is their best friend when it comes to winning their next
customer.� The views and opinions expressed by small business
owners and consumers who participate in the Small Business Watch
survey are their own and do not necessarily reflect those of
Discover Financial Services or its affiliates. About the Small
Business Watch The Discover Small Business Watch is a monthly index
measuring the relative economic confidence of U.S. small business
owners who employ less than five employees, a segment that consists
of 22 million businesses producing more than a trillion dollars in
annual receipts. The Watch is based on a national random survey of
1,000 small business owners. It is commissioned by the Discover
Business Card, which strives to offer the best business credit card
for American small businesses, and is conducted by Rasmussen
Reports, LLC (www.rasmussenreports.com), an independent survey
research firm. The numeric index is calculated by assigning values
to responses to a set of six consistent questions. The base value
of the Watch was established at 100.0 based on surveys conducted in
August of 2006. In addition to generating the index, the Small
Business Watch surveys small business viewpoints on key business
drivers, and also surveys 4,000 consumers to gauge purchasing
behavior and attitudes towards small businesses. For past results
and small business survey data, visit
www.discovercard.com/business/watch. For information on Discover
Business Card, visit www.discovercard.com/business. About Discover
Financial Services Discover Financial Services (NYSE:DFS) is a
leading credit card issuer and electronic payment services company
with one of the most recognized brands in U.S. financial services.
The company operates the Discover Card, America's cash rewards
pioneer. Since its inception in 1986, the company has become one of
the largest card issuers in the United States. Its payments
businesses consist of the Discover Network, with millions of
merchant and cash access locations, and PULSE, one of the nation's
leading ATM/debit networks. For more information, visit
www.discoverfinancial.com.
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