Plans for Business Development Spending Hit New Low
- HEALTHCARE: 85% of Small Businesses Do Not Offer Healthcare to Employees
- ECONOMY: More than Half of Small Business Owners Do Not Foresee Need to Raise Cash to Stay in Business
RIVERWOODS, Ill., Jan 26, 2009 (BUSINESS WIRE) -- After a brief rebound in December, economic confidence among small
business owners dipped in January as fewer owners plan to increase
spending for business development. The Discover(R)
Small Business WatchSM
index fell to 71.4 in January, down 1.4 points from December.
"Although small business owners expressed a little more optimism at the
end of 2008, most remain cautious and concerned as we begin a new year,"
said Ryan Scully, director of Discover's business
credit card. "As a result, we are seeing more owners hang onto their
cash and put business development spending plans on hold for now."
Only 19 percent of owners say they plan to increase spending on business
development over the next six months, the lowest number for this
category in the Watch's 30-month history. Forty-six percent say they
plan to reduce spending on business development and 30 percent are not
making any changes.
Another factor in this month's decline in optimism is a decrease in the
number of small business owners who see economic conditions for their
businesses improving. Seventeen percent of small business owners believe
that economic conditions for their businesses are getting better, down
from 21 percent in December. Those who feel conditions are getting worse
is unchanged at 51 percent, while 25 percent feel conditions remain the
same, up slightly from 23 percent last month.
Other January Findings:
Only 8 percent feel the economy is improving, down from 12 percent in
December. Sixty-nine percent of owners think the U.S. economy is
getting worse and 17 percent see no change, which is largely in line
The number of owners who say they have experienced temporary cash flow
issues in the past 90 days decreased in January to 38 percent from 42
percent in December.
61 percent rate the economy as poor, down from 63 percent in December
and 65 percent in November; only 6 percent rate the economy excellent
or good, mirroring December's results, while 33 percent describe the
economy as fair.
Fewer Small Businesses Offering Healthcare to Employees
Eighty-five percent of small business owners say they do not offer
health insurance to their employees, up significantly from 77 percent a
year ago and 74 percent in January 2007. Among small business owners who
do offer health insurance, 36 percent say they have considered
discontinuing coverage because of high costs.
A third of small business owners say healthcare costs have a major
impact on their ability to grow their business: 69 percent say that
obtaining affordable healthcare for themselves and their employees is
"very" or "somewhat" difficult, which is unchanged from last year.
"Over the last two years, the number of small business owners who offer
health insurance to their employees has fallen significantly," said
Scully. "While small business owners are finding ways to stay afloat in
this tough economy, eliminating healthcare benefits could be another
measure of the cost of that resiliency."
Additional healthcare findings include:
When asked whether any of their employees go without any health
insurance, 28 percent of owners said yes, 49 percent said no and 23
percent weren't sure.
25 percent of small business owners are uninsured, which is unchanged
from a year ago and up from 18 percent in January 2007. For the
remaining three-fourths of owners, 11 percent get insurance through a
company plan, 29 percent obtain insurance through a family member's
plan and 32 percent purchase it separately.
Among consumers, healthcare benefits were a selling point for 68% of
them in their decisions to accept their current jobs. In the Watch's
survey of 4,000 consumers, 43 percent say healthcare benefits were
"very important" when accepting their current job, 25 percent say they
were "somewhat important," 18 percent answered "not very important," 9
percent said "not at all important" and 5 percent weren't sure.
53% of Owners Say They Will Not Have to Raise Funds to Stay in
When asked whether they will have to raise money this year in order to
keep their businesses running, 53 percent of small business owners say
they will not, while 32 percent expect to need additional funds, and 15
percent were not sure.
Of those who say they will need extra money to stay afloat:
20 percent will look first to friends and family
19 percent will tap personal savings
18 percent will seek a bank loan
9 percent will use credit cards
1 percent will apply for a home equity loan
24 percent will choose some other form of funding
10 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 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.
SOURCE: Discover Financial Services
Discover Financial Services
Robinson Lerer & Montgomery