Riverwoods, Illinois, February 26, 2007
– Small business owners' confidence in
the American economy remained steady in February
as rising optimism about their own business fortunes
was offset by an increase in cash flow issues,
according to surveys conducted for this month's
Discover® Small Business Watch
SM.
At 113.4, the confidence measure was down less
than a point from January's 114.3 mark.
“Small
business owners are often the first to feel the
effects of changes in the larger economy, so we
believe they are an important barometer to track,”
said Sastry Rachakonda, director of Discover's
small business credit card. “Based on our Watch
numbers, economic confidence appears to be steady.
However, cash flow is something to keep an eye
on when it comes to small business indicators.”
February Key Findings:
•Cash flow concerns crept upward across
the board, especially among business owners who
sell products: 40 percent of those businesses
reported a significant jump in cash flow concerns,
compared to 24 percent the previous month.
•
Businesses are still focusing on growth: On the
hiring front, 17 percent of owners plan to hire
more workers in February, compared to 14 percent
last month; 39 percent also plan to spend more
on business development, which is up from 35 percent
last month.
•57 percent of small business
owners said their operations would be more energy-efficient
if the government offered incentives, such as
tax breaks; and 52 percent said that the government
did not do enough to help small businesses be
more energy efficient.
Poll:
Gasoline Is a Major Issue for 39% of owners; Most
Energy Concerns Are Minor This
month's poll found that changes in gasoline prices
affect profitability for 39 percent of respondents,
while the remaining owners say the effects are
minor (48 percent) or of no consequence (13 percent).
When asked to choose their largest energy
expense, 36 percent of small business owners cited
gasoline, but an unexpected 42 percent say they
have no significant energy expenses. Of the remaining,
13 percent named electricity, followed by fuel
oil (6 percent) and natural gas (3 percent).
“Gasoline prices are important to four out
of every 10 small business owners, and 52 percent
of them expect gas prices to increase in the next
three months,” Rachakonda said. “It will be extremely
interesting to see how this plays out in terms
of small business confidence.”
Among
the 4,000 consumers surveyed this month, 66 percent
say they expect to be charged more by small businesses
when gasoline prices go up. Even more of them,
77 percent, expect large businesses to do the
same.
Many consumers seem to support
businesses that adopt green energy practices:
42 percent of them say they would pay higher prices
for goods and services from such businesses, while
34 percent were unwilling and 25 percent were
undecided.
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
LLC Discover Financial Services
LLC, a business unit of Morgan Stanley (NYSE:
MS), operates the Discover Card with more than
50 million cardmembers, and the Discover Network
with more than 4 million merchant and cash access
locations. Discover Financial Services also operates
the PULSE ATM/debit network, which serves over
4,400 financial institutions and includes nearly
260,000 ATMs, as well as POS terminals nationwide.
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