Owners Concerned About Their Businesses; More Feeling Cash Flow
Strain
POLL: SLOWDOWN IN HOUSING MARKET NEGATIVELY IMPACTING SMALL
BUSINESSES AND CONSUMERS' WALLETS
RIVERWOODS, Ill.--(BUSINESS WIRE)--Aug. 27, 2007--Economic
confidence among small business owners fell in August after briefly
rebounding last month as small business owners expressed less
confidence in the economic conditions for their business and
experienced more cash flow issues, according to the Discover(R) Small
Business Watch(SM). At 102.4, the Watch is down nearly five points
from July's 107.3 and is nearly level with the Watch's lowest index
since its inception, June's 102.5.
"While small business owners' feelings regarding the overall
economy remain steady from last month, they are far less optimistic
about the economic conditions for their own business, which is likely
resulting from the cash flow concerns they are encountering," said
Sastry Rachakonda, director of Discover's small business credit card.
August Key Findings:
- 36 percent of small business owners feel that economic
conditions for their business are getting better, a
significant decrease from 41 percent in July.
- 41 percent said that they have experienced cash flow issues in
the last 90 days, an increase over last month's 35 percent.
- The percentage of business owners spending more on business
development in the next six months fell from 38% to 34%
Business Poll: Housing Market Having a Negative Effect on Business
More than one in three small business owners (35 percent) said
that recent changes in the housing market have had a significant
impact on their business. Twelve percent of the business owners have
applied for credit the last three months. However, 35 percent of
owners said that if obtaining credit becomes more difficult, it will
have an impact on their business.
Rachakonda continued: "Small business owners are clearly feeling
the impact of recent shifts in the housing market. If credit becomes
harder to secure, it is going to have a significant impact on their
businesses."
In response to other questions about their preferences, 69 percent
of small business owners also said that they prefer to have their
business remain small. Thirty-eight percent of them did not plan to
retire. In addition, 18 percent would transfer ownership to a family
member.
"These numbers are in line with the Watch last year" Rachakonda
said, "and it demonstrates the pride small business owners have in
their businesses. Small Business owners value their freedom and their
choice to remain small. Never to retire is an expression of their
independence."
Consumer Poll: Consumers Modifying Budgets to Address Housing
Market Changes
When asked what kind of impact the recent changes in the housing
market have had on their personal budgets and financial decisions,
more than one in three (34 percent) said the impact was significant.
"Shifts in the housing market are having an affect on consumers'
budgets," Rachakonda said. "This is likely to have an impact on small
business owners. The silver lining is that our poll found that 42
percent of consumers said they expected the houses in their area to be
priced higher six months from now which may help soften the impact on
small business owners."
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.discoverbiz.com/watch. For information on Discover Business
Card, visit www.discoverbiz.com.
About Discover Financial Services
Discover Financial Services (NYSE: DFS) operates the Discover Card
with more than 50 million cardmembers, the Discover Network with
millions of merchant and cash access locations, and the Goldfish
credit card business in the United Kingdom. Discover Financial
Services also operates the PULSE ATM/debit network, which serves more
than 4,400 financial institutions and includes nearly 260,000 ATMs, as
well as POS terminals, nationwide. For more information, visit
www.discoverfinancial.com.
CONTACT: Discover Financial Services
Jon Drummond
224-405-1888
jondrummond@discover.com
or
Robinson Lerer & Montgomery
Daniel Delson
646-805-2036
dmd@rlmnet.com
SOURCE: Discover Financial Services