November 29, 2010

Discover® Small Business Watchsm:Small Business Confidence Rises For Third Straight Month

Reported Cash Flow Issues Lowest in 17 Months, Forward-Looking Indicators Trend Positive or Steady
HAPPIER HOLIDAYS? 19% of Small Business Owners Expecting Year-Over-Year Increase in Business this Season, up from 11% Last Year
EXTENDING CREDIT: Fewer Customers Asking to Delay Payments than in 2009

RIVERWOODS, Ill., Nov 29, 2010 (BUSINESS WIRE) -- Economic confidence among the nation's small business owners continued to improve in November, according to the Discover® Small Business WatchSM. The monthly index rose to 87.2 in November, up 3 points from 84.2 in October - the third consecutive monthly gain, and nearly 11 points higher than a year ago.

Cash-flow concerns were at their lowest level in 17 months: 43 percent of small business owners experienced cash flow issues in the past 90 days, down from 46 percent in October. The highest this percentage has ever reached was 53 percent in August 2010 and July 2009; the lowest it has ever been was 32 percent in January 2007.

"We see slight improvements in nearly every survey category of the index, with significant improvement in the confidence of small business owners who sell consumer goods and services," said Ryan Scully, director of Discover's business card. "There would appear to be some measurable hope for the holidays that business will improve. Even still, there's no getting around the fact that 59 percent of America's small business owners still rate the economy as poor."

The subset direct-to-consumer segment of small business owners registered a confidence index of 89.6 in November, up from 83.6 in October, and 65.6 in August. The November index for this segment is the second highest recorded since October 2007.

Other November Confidence Indicators:

  • 25 percent of small business owners reported they will increase spending on business development in the next six months, up from 22 percent in October; 40 percent will decrease business development spending in the next six months, down from 46 percent in October; and 28 percent don't plan any changes.
  • 33 percent believe the economy is getting better, up from 31 percent in October and the highest since May; while 46 percent believe the economy is getting worse, down from 48 percent in October; 17 percent believe it's staying the same, equal to last month; and 4 percent are not sure.
  • 59 percent rate the current economy as poor, 30 percent rate it fair, 6 percent rate it as good and 4 percent rate it excellent.

Expectations Rise for the Holiday Season

The number of small business owners expecting more business over last year was 19 percent in November, up from 11 percent in 2009 and doubling from 9 percent in 2008. On the flip side, 32 percent of small business owners expect less business this holiday season, a drop from 2009 when 46 percent expected less holiday business. Forty-five percent of business owners expect business to be about the same as last year.

Fewer Extended Credit Customers Asking to Delay Payments than in 2009

Twenty-four percent of small business owners extend credit to their customers, according to the Watch. When asked whether in the past three months, any customers have delayed a payment or asked if they could delay a payment, 66 percent said yes, down from 73 percent in 2009.

In the past three months have any of your
customers delayed a payment or asked if they
could delay a payment?
Yes No Not sure
November 2010 66% 30% 4%
November 2009 73% 26% 1%
July 2008 70% 35% 5%
September 2007 64% 36% 0%

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 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 five 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 For information on Discover Business card, visit

About Discover

Discover Financial Services (NYSE: DFS) is a direct banking and 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 personal and student loans, online savings accounts, certificates of deposit and money market accounts through its Discover Bank subsidiary. Its payment businesses consist of 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 more than 185 countries and territories. For more information, visit

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.

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SOURCE: Discover Financial Services

Discover Financial Services
Jon Drummond
Jessica Douglas