Economy May Be Dampening Independent Spirit More Say They Would Leave Their Businesses for Higher Paying Job HEALTHCARE: Small Business Owners Split on Universal Coverage
RIVERWOODS, Ill., Jun 29, 2009 (BUSINESS WIRE) -- Economic confidence among small business owners rose slightly in June as
cash flow concerns abated and the mood on the economy held steady,
according to the latest Discover(R)
Small Business WatchSM.
The monthly index rose to 80.9, up from 78.1 in May.
"Cash flow problems are back to levels that are more in line with what
we've typically seen since the Watch began nearly three years ago," said
Ryan Scully, director of Discover's business
credit card. "Cash flow concerns usually erode confidence because
they represent something tangible to a business owner, more so than an
expectation or perception about the economy."
June Highlights:
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42 percent of small business owners say they have experienced
temporary cash flow issues in the past 90 days, down from May's record
high of 49 percent.
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26 percent believe economic conditions are improving, up from 23
percent in May, while 57 percent believe conditions are getting worse,
which is unchanged from the previous month; 14 percent said the
economy is staying the same, and 4 percent weren't sure.
-
59 percent of small business operators rate the economy as poor, down
1 percent from May, while 8 percent rate the economy as excellent or
good, and 30 percent called it fair.
-
49 percent of owners see economic conditions for their businesses
getting worse, up 1 percentage point from May; 25 percent see
conditions improving, also up 1 percentage point; 22 percent say
conditions are the same; and 4 percent weren't sure.
-
51 percent of small business owners say they plan to decrease spending
on business development over the next six months, down from 53 percent
in May; 22 percent plan to increase spending, and 24 percent are not
planning any spending changes.
POLL: More Say They Would Leave Their Business for Higher Paying Job,
Generating New Business Gets More Challenging
"The economy clearly seems to be taking its toll on the independent
spirit of small business owners," Scully said. "This year 36 percent
told us they are willing to walk away from their own business to earn
more money working for someone else - a jump from 30 percent last year.
They are spending much more time this year trying to find new business
and deal with government regulations."
While independence and flexibility continue to be the main reasons why
people start their own businesses, a sense of accomplishment and needing
a job also gained ground as key motivators compared to the last year:
-
24 percent say they started a business to have more flexibility with
their time, down from 29 percent in June 2008.
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22 percent cited the ability to be their own boss.
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15 percent said they wanted a feeling of accomplishment, up from 11
percent last year.
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12 percent started their own businesses to make more money.
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10 percent cited needing a job, up from 7 percent last year.
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14 percent answered "Some other reason" when asked why they started
their businesses.
When asked about the most challenging aspect of owning a business:
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40 percent chose finding new business, up significantly from 31
percent in June 2008 and 28 percent in June 2007.
-
23 percent cited government rules and regulations, up from 13 percent
in 2008.
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11 percent said managing cash flow, a noticeable drop from 19 percent
in 2008 and 21 percent in 2007.
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7 percent said employing good people.
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4 percent said managing insurance costs.
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11 percent answered "Some other aspect" and 5 percent weren't sure.
The source of financial capital for starting their businesses is largely
unchanged over the past three years: 45 percent said they used personal
savings followed by:
-
19 percent, bank loans
-
16 percent, funding from family and friends
-
8 percent, credit cards
-
4 percent, second mortgage or equity loan
-
8 percent answered "Some other way."
Health Care Poll: Owners Split on Universal Healthcare
"While many small business owners feel constrained by the costs of
offering health insurance to their employees, they're still split on
whether they want the government to get involved," Scully said. "This is
a further indication of their independent streak and their aversion to
government intervention in running their businesses."
Seventy-eight percent of small business owners said they do not offer
health insurance to employees, and they are split on whether America
needs a universal healthcare system: 48 percent of them said the country
does not need a government-run option, 45 percent said it does and 7
percent weren't sure.
Of those who offer health insurance, 62 percent said a government
mandate to either provide insurance or pay a fee would have a negative
impact on their businesses; 16 percent said the effect would be
positive; 11 percent said it would have no impact; and 3 percent weren't
sure.
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 have 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 750 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 2006. In addition to generating the index, the Small
Business Watch surveys small business owners every month on key issues,
and polls 3,000 consumers four times per year to gauge purchasing
behavior and attitudes towards small businesses. For past results and
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. Since its inception in 1986, the
company has become one of the largest card issuers in the United States.
The company operates the Discover Card, America's cash rewards pioneer,
and offers student and personal loans, as well as savings products such
as certificates of deposit and money market accounts. 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.
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SOURCE: Discover Financial Services
Jon Drummond
Discover Financial Services
224-405-1888
jondrummond@discover.com
or
Daniel Delson
Robinson Lerer & Montgomery
646-805-2036
dmd@rlmnet.com