January 02, 2008

Discover(R) Small Business Watch(SM): Small Business Owners Still Cautious On Economic Outlook

Monthly Index Drops Slightly as Cash Flow Concerns Rise, Fewer See
Conditions Getting Better

WOMEN vs. MEN: Poll Finds Women Seek Flexibility, Men Want
Independence When Starting a Business; Women More Likely to Make
Collaborative Decisions

RIVERWOODS, Ill.--(BUSINESS WIRE)--Jan. 2, 2008--Economic confidence among small business owners is off slightly for December, down a half-point from the previous month, as small business owners expressed less confidence that economic conditions are getting better, either in the general economy or with their own businesses. At 92.7, the Discover Small Business Watch is down from 93.2 in November, a full 17 points lower than at the same time a year ago.

"The Index hasn't moved enough this month to be of too much concern," said Sastry Rachakonda, director of Discover's business credit card. "The mood remains cautious as fewer small business owners feel like economic conditions for their businesses are getting better. The mood could change either way depending on holiday receipts."

December Key Findings:

  • 28 percent of small business owners feel that economic conditions for their own business are getting better. The percentage has been steadily decreasing since September, when 40 percent of owners felt conditions were improving.

  • 65 percent of small business owners feel that economic conditions in the U.S. are getting worse, slightly fewer than the 68 percent who felt that way in November. The number who believe it is getting better remained the same.

  • 42 percent said they have experienced cash flow issues over the last 90 days, an increase from 38 percent in November but even with 42 percent from December 2006.

  • Plans for spending on business development increased this month, with 32 percent of owners planning to increase spending on activities such as advertising and inventory, compared with 29 percent in November, but lower than 37 percent in December 2006.

Poll: Men Want To Be Their Own Bosses, Women Seek Flexibility

In a poll of 1,000 small business owners who were asked to name their single biggest reason for becoming entrepreneurs, the majority cited being their own boss and having more flexibility as their top two motivations. Looking closer, among business women, more favor flexibility, 32 percent, to being independent, 17 percent; while men choose being their own boss, 27 percent, ahead of flexibility, 24 percent.

Differences also appear in decision-making: 77 percent of men said that they make most business decisions on their own, compared to 72 percent of women who said the same. Similarly, more women than men, 28 percent to 23 percent, allow employees and associates to participate in business decisions.

"Small business owners want to control their destiny," Rachakonda said, "However, men and women do this in different ways. For men, it is about being in control and being their own bosses, while for women, it is about having more flexibility with their time."

In the key areas of launching a business, networking and attracting new clients, both sexes think the other has the upper hand:

  • 39 percent of male business owners think it is easier for women to start businesses, while 34 percent think it is easier for men. Conversely, 20 percent of female small business owners think it is easier of men to start businesses, compared to 15 percent who think women have it easier.

  • 30 percent of men think it is easier for women to attract new business and only 16 percent think it is easier for men. Among women, 39 percent think it is easier for men to attract new clients while only 19 percent think women have the edge.

  • 24 percent of men believe it is easier for women to network, while 15 percent of men think they have it easier. On the female side, 12 percent of women say men have it easier, while only 8 percent think women have it easier. Overall, two-thirds of all respondents think both sides are about the same when it comes to networking.

"It is interesting to see that the grass seems greener on the other side with both genders," Rachakonda said. "However, the fact is that the majority of both genders feel that it does not make a difference."

Daughters may have a harder time inheriting a business than sons. Among business owners who have children of both sexes and plan to have a child take over, 43 percent say they wouldn't pass it on to a daughter, compared to 32 percent who said they would, while 25 percent weren't sure. In the gender breakdown, women were more likely to pass their businesses to daughters, 39 percent, compared to 29 percent of men.

The poll also found similarities between the sexes. In handling home life versus work life, 81 percent of both sexes equally feel like they are balancing the two either "pretty well" or "very well." Only 15 percent of owners said they were balancing "not so well," followed by 3 percent who said they were balancing "badly."

"The results seem to indicate that the vast majority of small business owners, led by their independence and flexibility, are finding the kind of time they need to spend with their families or with interests outside of work," Rachakonda said.

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, and PULSE, one of the nation's leading ATM/debit networks. Discover also operates the Goldfish credit card business in the United Kingdom. For more information, visit

CONTACT: Discover Financial Services
Jon Drummond
Robinson Lerer & Montgomery
Daniel Delson

SOURCE: Discover Financial Services