3 out of 4 Small Business Owners Expect More National Economic Decline ELECTION POLL: WHICH PARTY BEST REPRESENTS SMALL BUSINESS? Owners Share Party Preferences and Expectations for Next President
RIVERWOODS, Ill.--(BUSINESS WIRE)--
Economic confidence among small business owners declined sharply
in September amid rising concerns about economic conditions for their
businesses and a bleak vision of where the economy is headed. The
Discover(R) Small Business Watch(SM) fell to 74.6 in September, down
12.3 points from August.
"Even though we had two months of rising confidence, this month's
drop isn't surprising given the constant stream of uninspiring news
about the housing and lending markets, as well as the turmoil on Wall
Street," said Ryan Scully, director of Discover's business credit
card. "But when you look closer at the numbers, cash flow issues are
steady and there is little change in their intentions for business
development spending."
"The real mover of this month's confidence level is the overall
sense that the economy is getting worse," Scully said. "That number
dropped 13 percentage points, and the number of those who think the
economy is getting better hit an all-time low of only 7 percent."
September Key Findings:
- 42 percent of small business owners say they have experienced
cash flow issues over the last 90 days, unchanged from August.
- 51 percent believe economic conditions for their businesses
are getting worse, up from 44 percent in August.
- The number of small business owners who think the U.S. economy
is getting worse rose to 73 percent from 60 percent in August;
only 7 percent of small business owners feel the economy is
getting better, the lowest rating in the Watch's history.
- 57 percent rate the economy as poor, up from 51 percent in
August; 32 percent rated it fair, 10 percent rated it good and
1 percent rated it excellent.
- 28 percent plan to increase spending on business development
over the next six months, which is unchanged from August; 44
percent plan to decrease spending and 26 percent anticipate
making no changes.
Most Owners Holding Off On Borrowing, Taking Home Less Money
Sixty-seven percent of small business owners say that despite the
current economic climate, they have not been forced to borrow money to
pay bills for their business. In addition, 73 percent say gas process
are having a negative effect on their profitability.
"The current economy has been picking their pockets to some
degree, but the good news is that less than a third of small business
owners have attempted to borrow money, either from a bank, or family
and friends. Instead, 72 percent of them have resorted to taking home
less money from the business - which is sharply higher than it was
seven months ago."
For those who are seeking loans, 72 percent say it is harder to
borrow money right now.
"The fact that small business owners are not borrowing during
these times hints at their independence - from Wall Street and other
economic factors - as well as their flexibility in finding ways to
keep their businesses going," Scully said.
Election Poll: Economy Continues to Outpace All Other Issues
The economy remains the biggest election issue for small business
owners, by far outpacing every other major campaign issue combined.
In September, 52 percent of small business owners said that the
economy is the top issue in this election, up significantly from 35
percent in January; national security and the war in Iraq each
garnered 10 percent this month; followed by government ethics and
corruption, 8 percent; immigration, 8 percent; and healthcare, 4
percent.
"When it comes to this election, it's clear that the state of the
economy is the biggest issue, but owners are pretty divided over which
party is best equipped to help them, and whether they expect any help
at all," Scully said.
When it comes to getting help from the next president, small
business owners are split: 45 percent said they were very confident or
somewhat confident that the next president will improve operating
conditions for small business owners, and 44 percent were either not
very confident or not at all confident in the next administration.
As for which party best represents their interests, 43 percent
said Republicans, 40 percent said Democrats; 5 percent think some
other party has the answers and 12 percent were not sure.
The last time small business owners were asked the same question
in October 2006, 41 percent said Republicans and 33 percent said
Democrats.
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.discovercard.com/business/watch. For information on Discover
Business Card, visit www.discovercard.com/business.
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
www.discoverfinancial.com.
Source: Discover Financial Services