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Discover(R) Small Business Watch(SM): Small Business Economic Confidence Rebounds; Owners More Confident In Business Outlook, Report Fewer Cash Flow Issues

July 30, 2007

POLL: SMALL BUSINESSES IN B2B ROLES HIT HARDEST IN SUMMER;
Vacation Season Means Slowdown for Small Businesses That Serve Other
Companies; After Family and Friends Consumers Prefer Smaller Lodging
Options on Summer Trips

RIVERWOODS, Ill.--(BUSINESS WIRE)--July 30, 2007--Economic confidence among small business owners rose in July as more small business owners expressed increased levels of confidence in the economic conditions for their business and reported fewer cash-flow issues, according the Discover(R) Small Business Watch(SM). At 107.3, the Watch is up nearly five points from June's 102.5.

"Small business owners seem to be more cautious about the larger economy than they were in the spring, but confidence in their own operations has rebounded, and their cash flow seems to remain unaffected," said Sastry Rachakonda, director of Discover's small business credit card. "The number of small business owners who report having had no cash-flow issues for the past 90 days is up to 60 percent - the highest it has been since March."

July Key Findings:

  • 41 percent of small business owners feel that economic conditions for their business are getting better, a significant increase from 34 percent in June.


  • 39 percent of owners said that they would rate the overall U.S. economy as "excellent" or "good", which is nearly the same as last month's 38 percent.


  • 38 percent plan to increase spending on business development, up from 35 percent last month.

Business Poll: Summer Slowdowns Don't Apply to Most Small Businesses, B2B Owners Feel It Most

"Small businesses that provide services to other businesses clearly see a difference in revenue during the summer months," Rachakonda said. "Fifty percent of these owners said they notice a slowdown in their own business. However, among all small businesses, 56 percent say slowdowns by other businesses do not affect the bottom line during the summer."

The poll found that three out of four small businesses (76 percent) said that their business either increases (33 percent) or stays the same (43 percent) during the summer.

Consumer Poll: Family and Friends Come First for Summer Vacationers, Small Motels and B&Bs Not Far Behind

When consumers were asked where they usually stay during summer vacations, 31 percent choose to stay with friends and family, followed by 21 percent who prefer either a small motel or bed & breakfast and 10 percent who opt for campgrounds. Larger hotels attract 21 percent of consumers.

"This month's findings offer two strong pieces of advice for small business owners who are in the vacation lodging business," Rachakonda said. "One: You need to be on the Internet. Two: A picture is worth a thousand words."

When asked where they usually find vacation accommodations, 45 percent of consumers said the Internet, while 19 percent rely on the recommendations of friends and family, 17 percent make their choices based upon a previous stay, 4 percent find lodging through magazines, newspapers or television, and 15 percent weren't sure.

Fifty percent of consumers also said they would not stay overnight at a place they had not seen in a brochure, in the media, on the Internet or in person; while 38 percent said they would, and the remaining 12 percent couldn't decide.

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