Discover® Small Business WatchSM: Small Business Confidence Levels off in June Increased Cash Flow Issues Lead to Dip in Index
28 Giugno 2010 - 4:00PM
Business Wire
Small business owners’ economic confidence leveled off in June,
halting a two-month rise, according to the Discover® Small Business
WatchSM. The index dipped to 86.1 this month from 87.4 in May as
rising concerns over temporary cash flow issues offset some
improvement in the way small business owners see the climate for
their own operations.
Small business owners reporting temporary cash flow issues
jumped to 51 percent in June, up from 45 percent in May and the
highest since January. Forty-five percent of owners reported no
cash flow issues, down from 48 percent in May; and 4 percent were
unsure.
The Watch recorded a slight increase in confidence about how
individual business owners were faring: 30 percent say economic
conditions for their businesses are improving, up from 28 percent
in May; 43 percent said conditions are getting worse in June, down
from 44 percent in May; and 34 percent said things are staying the
same, up from 24 percent in May.
“Many small business owners are working harder than ever to make
payroll, pay their bills and keep their businesses running,” said
Ryan Scully, director of Discover’s business credit card. “Last
month, more owners reported increasing their spending, which is
good news. However, if sales are lagging this month, it’s possible
that cash flow was more of an issue.”
In June, 29 percent of small business owners said they believe
the overall economy is getting better, falling from 35 percent in
May; 51 percent say the economy is getting worse, steady from the
previous month; and 16 percent see the economy as the same, up from
12 percent in May.
Other June Confidence Indicators:
- While the number of small
businesses rating the economy as poor fell to 51 percent from 56
percent in May, the percentage rating the economy good or excellent
held steady at 12 percent. Thirty-seven percent rated the economy
fair, up from 32 percent in May.
- 43 percent of owners said they
plan to decrease spending on business development activities such
as advertising, inventories, and capital expenditures, down from 46
percent in May; 25 percent planned to increase spending, no change
from May; and 29 percent are planning no changes in spending on
development, up from 25 percent in May.
POLL: Some Small Business Owners Feeling Negative Effects
from Major World Events
When asked to rate separately the impact on their businesses of
the performance of the U.S. stock market, the oil spill in the Gulf
of Mexico and the European debt crisis:
- 51 percent of small business
owners said the stock market was having some negative impact on
their businesses, while 37 percent said it had no impact at all,
and 10 percent felt some positive effect.
- 30 percent said the gulf oil
spill has had some negative effect, while 63 percent said it had no
impact at all, and 4 percent indicated that it has had some
positive effect.
- 40 percent have felt some
negative impact from the debt crisis in Europe, while 51 percent
said it had no effect, and 6 percent said they have experienced
some positive effects.
POLL: Entrepreneurial Spirit Holds out Against Rough
Economy
The shape of the economy over the past two years apparently
hasn’t had a huge impact on the American entrepreneurial spirit –
53 percent of small business owners would not take a job for the
same or more money, and fewer owners than last year would make the
switch. Thirty-four percent of small business owners said in June
that they would take a job, if offered, for the same or more money;
which is down from 36 percent in 2009, but still up from 30 percent
in 2008.
Some small business owners have considered a business change: 40
percent of respondents said they’ve recently considered modifying
their business model or entering a new line of business. Among
those making the consideration, 50 percent selected “The recession
severely hurt my business” as their reason, with the other half
choosing from the following list of reasons:
- 17 percent – “My industry is
changing.”
- 11 percent – “I can’t make
enough money in my current business.”
- 5 percent – “There’s too much
competition in my industry.”
- 5 percent – “I’m losing interest
in my current business.”
- 8 percent – “Some other
reason.”
The two main reasons for becoming a small business owner have
remained the same since the Watch first asked the question in 2007
– more flexibility with their time and being their own bosses. This
year 50 percent of small business owners selected one of those two
reasons, compared to 46 percent in 2007. As for the other reasons
they had to choose from compared to 2007:
- 16 percent said they did it for
a “feeling of accomplishment,” up from 14 percent
- 10 percent cited “making more
money,” down from 19 percent
- 9 percent said they “needed a
job,” up from 8 percent
- 12 percent cited “some other
reason,” up from 11 percent
When asked what it would take for them to consider selling their
business: 41 percent said they would never sell; 27 percent aren’t
sure; 18 percent would need a premium on what they’ve invested; 11
percent would need enough to pay back what they’ve invested; and 3
percent would take a discount on what they’ve invested to exit the
business.
The main challenges of running a small business remain
consistent over last year, with 34 percent of owners citing finding
new business as their main challenge, down from 40 percent in 2009,
followed by the difficulties of:
- 23 percent – Government rules
and regulations
- 11 percent – Managing cash
flow
- 7 percent – Getting good
employees
- 4 percent – Managing healthcare
and other insurance costs
- 11 percent – Some other
challenge
- 5 percent – Not sure
A majority of small business owners continue to see running
their businesses as riskier than working for a large company, but
this year only 31 percent said starting a business was riskier than
they originally thought it would be, down from 47 percent who
believed so in 2009.
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
have 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 750
small business owners. It is commissioned by 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 2006. In addition to generating the index, the Small
Business Watch surveys small business owners every month on key
issues, and polls 3,000 consumers four times per year to gauge
purchasing behavior and attitudes towards small businesses. For
past results and survey data, visit
www.discovercard.com/business/watch. For information on Discover
Business card, visit www.discovercard.com/business.
About Discover
Discover Financial Services (NYSE: DFS) is a direct banking and
payment services company with one of the most recognized brands in
U.S. financial services. Since its inception in 1986, the company
has become one of the largest card issuers in the United States.
The company operates the Discover card, America's cash rewards
pioneer, and offers personal and student loans, online savings
accounts, certificates of deposit and money market accounts through
its Discover Bank subsidiary. Its payment businesses consist of
Discover Network, with millions of merchant and cash access
locations; PULSE, one of the nation's leading ATM/debit networks;
and Diners Club International, a global payments network with
acceptance in more than 185 countries and territories. For more
information, visit www.discoverfinancial.com.
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