November 24, 2008

Discover(R) Small Business Watch(SM): Small Business Economic Confidence Continues To Fall

40% of Small Operators Expect Less Holiday Business This Year

RIVERWOODS, Ill., Nov 24, 2008 (BUSINESS WIRE) -- The Discover(R) Small Business Watch(SM)continued to decline for the third straight month, dropping below 70.0 for the first time since the Watch was established in August 2006. The index fell 3.9 points in November to 67.5.

"Small businesses are continuing to feel pressure in this weakening economy," said Ryan Scully, director of Discover's business credit card. "The number of owners having trouble paying their bills is the highest we've seen since April and more than half of owners are cutting back on their business development plans, which is an all-time high."

November Key Findings:

-- 44 percent of small business owners have experienced cash flow issues over the last 90 days, up sharply from 38 percent in October. This is the category's highest rating since April 2008, when the same number of owners reported cash flow issues.

-- Cash flow difficulties were most pronounced for small business owners whose primary customers are consumers: 49 percent said they had cash flow issues in the past 90 days that caused them to hold off on paying some bills, while only 33 percent of owners who sell business-to-business expressed the same issue.

-- 51 percent plan to decrease spending on business development over the next six months, up significantly from 42 percent in October and a record-high for this category; 20 percent plan to increase spending, down slightly from 23 percent last month; and 24 percent are not planning any changes in the next six months.

-- 65 percent rate the economy as poor, up 1 percent from October; only 5 percent rate the economy excellent or good, the lowest rating in this category in the history of the Watch.

-- 54 percent believe economic conditions for their businesses are worsening, up from 53 percent in October; and only 15 percent feel conditions for their business are improving, which is another record low.

-- The number of small business owners who think the U.S. economy is getting worse decreased by two percentage points to 72 percent in November; 8 percent feel the economy is getting better and 14 percent think it is staying the same.

Election Poll: Small Business Owners Want Obama, Congress to Make Taxes a Top Priority

Of the issues small business owners would like to see President-elect Obama and the new Congress tackle first, 29 percent said taxes, followed by health insurance at 21 percent; energy costs, 15 percent; inflation, 13 percent; and access to capital, 12 percent.

Owners remain skeptical, however, that the government can help them: 64 percent said they are not confident the federal government and Congress can address the needs of America's small businesses.

Looking back on the recent campaign, 47 percent said they felt that Joe the Plumber, aka Samuel Wurzelbacher, was a good representative of the concerns of most American small business owners, 40 percent said he was not a good representative, while 14 percent were not sure.

"Although we know small business owners don't feel represented by the federal government, that didn't keep them from the polls," Scully said. "More than 90 percent of small business owners told us they voted in the presidential election."

Holiday Poll: 4 in 10 Small Business Owners Expecting Holiday Drop-off

Forty percent of small business owners expect to do less business this holiday season than in 2007, while 47 percent expect it to be about the same, 9 percent expect more business this year and 4 percent weren't sure.

Most of the small business owners polled for the Watch, 63 percent, said they make less than 10 percent of their annual income during the holidays, followed by 21 percent who make about a quarter of their annual income at this time of year, and 5 percent who make less than half of their income in this season.

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 (, 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 For information on Discover Business Card, visit

About Discover Financial Services

Discover Financial Services (NYSE: DFS) is a leading credit card issuer and electronic payment services company with one of the most recognized brands in U.S. financial services. The company operates the Discover Card, America's cash rewards pioneer. Since its inception in 1986, the company has become one of the largest card issuers in the United States. Its payments businesses consist of the 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 185 countries and territories. For more information, visit

SOURCE: Discover Financial Services

Discover Financial Services
Jon Drummond
Robinson Lerer & Montgomery
Daniel Delson