Most Still Cautious, But Some See Improving Conditions for Their Businesses
POLL: 69% of Small Business Owners Expect Recovery to Take at Least 12 Months
RIVERWOODS, Ill.--(BUSINESS WIRE)--Dec. 29, 2008--After falling to its lowest measurement ever in November, economic
confidence among small business owners rose slightly in December. The Discover(R)
Small Business WatchSM
rose to 72.8 in December, up 5.3 points from November. The index was
buoyed by increased optimism that their own business prospects are
improving and an indication that more will increase spending on business
development in the next six months.
"While we saw small improvements in economic confidence almost across
the board this month, the mood still remains cautious," said Ryan
Scully, director of Discover's business
credit card. "Most small business owners still believe that it will
be at least into 2010 before the economy recovers."
December Key Findings:
-- 21 percent of small business owners believe that economic conditions for
their businesses are getting better, up from 15 percent in November,
which was the all-time low in the 29-month history of the Watch.
Fifty-one percent feel the conditions are getting worse, which is down
from 54 percent last month.
-- 24 percent of owners say they plan to increase spending on business
development over the next six months. This is an increase from 20
percent who said the same in November. Forty-seven percent say they are
planning to decrease spending on business development compared to 51
percent last month.
-- Cash flow issues decreased slightly in December as 42 percent of owners
say they held off paying some bills in the past 90 days. Forty-four
percent said the same in November.
-- 63 percent rate the economy as poor, down 2 percent from November; only
6 percent rate the economy excellent or good, the second-lowest rating
in this category in the history of the Watch.
-- 12 percent feel the economy is getting better, which is the highest in
this category since August 2008. The number of small business owners who
think the U.S. economy is getting worse decreased by two percentage
points to 70 percent in December; and 14 percent think it is staying the
same.
69% of Small Business Owners Think U.S. Recovery Will Take At Least
12 Months
As the new year approaches, small business owners remain cautious about
the amount of time it will take the economy to crawl out of its slump.
Forty-two percent of owners anticipate that economic recovery will take
between 12 and 24 months, while 27 percent believe that it will take
longer than 24 months. Twenty-three percent think that the recovery will
take less than 12 months.
"Economic confidence has been declining for the past year, and small
business owners continue to be resilient by doing whatever it takes,
including not relying on credit and taking home less pay," Scully said.
"It's not surprising that they seem to be buckling down for a long
recovery since more than half of them have been telling us the economy
is getting worse every month for the past 22 months."
Government Bailout Support Mixed
Sixty-eight percent of small business owners say they do not expect that
government bailout assistance to banks will help their businesses in the
next six months.
Fifty-five percent of small business owners do not believe U.S.
automakers deserve a chance to qualify for some form of federal bailout
assistance, while 33 percent say they would support a bailout for
automakers and 12 percent answered "not sure."
When it comes to themselves, 48 percent of small business owners say
they should be entitled to federal bailout assistance, while 35 percent
didn't think small businesses deserved federal bailout help and 16
percent were not sure.
Decreased Sales Pose Biggest Threat
When asked where they have felt the most negative stress on their
business operations in the past year, 30 percent said decreased sales;
followed by 23 percent who cited higher operating costs; 17 percent said
taxes; 7 percent said financing and credit, and 17 percent said their
business has not been under stress in the past year.
It appears fewer small business owners are extending credit to their
customers. In December, 25 percent said they extend credit, and 72
percent of those who extend credit say that they have customers who have
delayed a payment or asked if they could delay a payment in the last
three months. In September 2007, 30 percent of small business owners
were extending credit to their customers and 64 percent had received
delayed payments or requests to delay payments.
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.
CONTACT: Discover Financial Services
Jon Drummond
224-405-1888
jondrummond@discover.com
or
Robinson Lerer & Montgomery
Daniel Delson
646-805-2036
dmd@rlmnet.com
Source: Discover Financial Services