Discover® Small Business WatchSM:
Small Business Economic Confidence Drops Sharply after 3-Month Climb
Cash Flow Issues Increase; Spending on Business Development Decreases
POLL: ECONOMY TAKING ITS TOLL ON SMALL BUSINESS WORKWEEK
Many Small Business Owners Putting in More Hours and Canceling or
Postponing Vacations
RIVERWOODS, Ill.--(BUSINESS WIRE)--After reaching its highest level in 14 months, the economic confidence
among small business owners fell in May as owners reported cash flow concerns and expect to cut back on business development spending, according to the latest Discover® Small Business WatchSM.
The monthly index dropped more than 10 points to 78.1, down from 88.5 in April. The Watch also recorded significant drops in the numbers of small business owners who think the overall economy is getting better, and number of owners who thought economic conditions were improving for their own businesses.
“We saw cash flow problems jump this month to their highest level in 2½ years, which is certainly not going to boost the optimism of a small business owner, especially in this economic climate,” said Ryan Scully, director of Discover's business credit card. “However, for the past three months we’ve been recording our highest confidence levels since summer of 2008, so all is not lost.”
May Highlights:
- 49 percent of small business owners say they have experienced
temporary cash flow issues in the past 90 days, up 10 percentage
points from April. That’s the highest percentage in that category
since the Watch started in August 2006.
- Nearly half of small business owners, or 48 percent, see economic
conditions for their businesses getting worse, up from 40 percent in
April; 24 percent see conditions improving, down from 32 percent last
month; and 23 percent say conditions are the same; 4 percent were not
sure.
- 60 percent of small business operators rate the economy as poor, up
from 54 percent in April. Only 7 percent rate the economy as excellent
or good, and 32 percent called it fair.
- 57 percent believe the economy is getting worse, up from 51 percent in
April, while 23 percent believe it’s getting better, down from 31
percent in April; 16 percent say it’s staying the same; and 4 percent
weren’t sure.
- 53 percent of small business owners say they plan to decrease spending
on business development over the next six months, an increase over the
46 percent in April who said the same. Twenty-two percent plan to
increase spending, which is largely unchanged from 21 percent in
April; while the number of owners who were not planning any changes in
spending dropped from 30 percent in April to 23 percent in May.
As documented in previous Watch surveys, American small business owners report working more hours, more days and more holidays than their general public counterparts, and during the past year, that gap has widened. While the amount of days and hours on the job for the average American have been relatively flat since 2007, the number of small business
owners who work more than 10 hours a day jumped from 30 percent in 2008 to 39 percent in 2009. In comparison, only 20 percent of average workers make the same claim.
When it comes to days worked per week, 61 percent of small business owners said they work six or more, up from 45 percent in 2008 and 43 percent in 2007. Comparatively, only 22 percent of workers in the general population say they work more than five days a week. “The economy has obviously been a factor for small business owners caught in the slowdown; they’re grinding out more hours serving existing customers and likely putting in more time looking for new business,” Scully said.
More Work Survey Results:
- Given their heavy work schedules, small business owners are finding
less time for vacation than in years past. Today, only 29 percent say
they have taken a vacation in the past year that lasted a week, down
from 40 percent in May 2008 and 41 percent in May 2007. Thirty percent
say it’s been four years or more since they had a vacation that lasted
a week, up from 23 percent in both 2008 and 2007.
- 56 percent of small business owners say that the economy has caused
them to postpone or cancel vacation time this summer, compared to 45
percent of the general population who said the same.
- 27 percent of small business owners define a day off as not working at
all, followed by 37 percent who say a day off means not actively
working, but available for calls and e-mails; 25 percent define it as
working an hour here and there; 7 percent said it’s working all day,
but from a remote location; and 3 percent weren’t sure how they would
define a day off. In the general population, 54 percent of people
define a day off as not working at all.
- 57 percent of small business owners say they always or most of the
time work on holidays, up from 47 percent in 2008.
- 31 percent of the general public says they always or most of the time
work on holidays, up from 29 percent in 2008.
- The spouses of small business owners haven’t changed their opinions
much since 2007 on whether they approve of checking work e-mail when
away: 56 percent approve, 19 percent disapprove and 24 percent aren’t
sure.
- Spouses in the general public seem to be getting much more used to the
idea of checking work e-mail when off: In 2007, only 21 percent of
spouses approved of the practice, while 74 percent disapproved and 5
percent weren’t sure. This year, 39 percent of spouses approve, 22
percent disapprove and 39 percent aren’t sure.
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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