Riverwoods, Illinois, March 26, 2007
– In spite of mixed messages from other segments
of the economy, economic confidence among small
business owners increased in March, driven in
part by improved cash flow and rising confidence
among consumer-focused merchants, according to
surveys conducted for this month's Discover® Small
Business Watch
SM. At 117.7, the Watch
rose slightly more than four points over February's
mark of 113.4.
“With uncertainty in so
many sectors, it isn't surprising that the percentage
of small business owners who feel the overall
economy is getting worse did increase this month,”
said Sastry Rachakonda, director of Discover's
small business credit card. “However, there was
also an increase in the number of owners who believe
economic conditions will get better for their
individual businesses in the next six months.
The cash flow situation among businesses has improved
over last month. We have to be on the lookout
to see if the recent sub-prime woes will eventually
affect small business owners in terms of cash
flow and their access to capital.”
March
Key Findings: •51 percent of
the small business owners thought the economy
was getting worse up from 47 percent in February.
•Cash flow has improved since last month.
In March, 33 percent of small business owners
indicated that they had experienced temporary
cash flow issues, down from 39 percent in February.
•49 percent of small business owners
indicated that economic conditions for their businesses
were getting better, up from 44 percent in February.
Spotlight Poll: Tax Prep Takes
Toll on Small Business Owners “Nearly
three out of four small business owners feel that
the complexity of tax code is a distraction. Nearly
two out of five business owners struggle with
finding and organizing tax documentation.” Rachakonda
said. “Tax preparation and filing certainly places
a burden on small business owners in America.”
Burden of Tax Preparation
• 77 percent of small business owners
say tax preparation and documentation is either
very time consuming or somewhat time consuming.
•74 percent say the complexity of the
tax code distracts them from focusing on the needs
of their businesses.
•39 percent find
it very difficult or somewhat difficult to find
and organize tax documentation.
Assistance
from Accountants • 73 percent
of business owners will hire an accountant to
do their taxes, compared to 54 percent of people
who don't own businesses who plan to hire an accountant.
•More small business owners, 56 percent,
feel that accountants deserve the fees they charge,
compared to 41 percent of people who don't own
businesses.
• The biggest advantage
of hiring tax professionals – according to both
small business owners and consumers – is having
them handle paperwork. Finding more deductions
finished a close second.
•40 percent
of small business owners and 30 percent of consumers
expect to pay lower taxes if they hire a professional.
“In spite of increasing tax software
usage, both business owners and non-business owners
find that accountants still add value in the tax
preparation process,” Rachakonda said.
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/watch.
About Discover Financial Services
LLC Discover Financial Services
LLC, a business unit of Morgan Stanley (NYSE:
MS), operates the Discover Card and the Discover
Network. Discover Financial Services also operates
the PULSE ATM/debit network. For more information,
visit
www.discovercard.com,
www.discovernetwork.com
or
www.pulse-eft.com.
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.
Media Contacts
Jon Drummond
Discover Financial Services
224-405-1888
jondrummond@discoverfinancial.com
Daniel Delson
Robinson Lerer &
Montgomery
646-805-2036
dmd@rlmnet.com