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Discover® Small Business WatchSM: Economic Confidence Bounces Back from Brief Tumble

Small Business Owners See Conditions for Their Businesses Improving, Rate the Overall Economy Better

NETWORKING: Small Business Owners Continue Slow Crawl onto Web: Social Networking Increases Over Last Year, 21% More Small Businesses Have Web Sites

RIVERWOODS, Ill., Apr 26, 2010 (BUSINESS WIRE) --Small business confidence jumped 9.4 points from March to April, bringing the measure of small business confidence back to where it was at the start of the year, according to the Discover(R) Small Business WatchSM. The index rose to 85.1, up from 75.7. A similar jump occurred last year when the index gained 10.3 points from March to April.

"Small business owners are more positive this month about where the current economy stands and where it appears to be heading," said Ryan Scully, director of Discover's business credit card, who commissions the monthly survey. "The percentage of owners who rate the economy good or excellent is the highest it has been since August 2008 - just weeks before the collapse of the financial markets."

April results show a surge in the number of small business owners who say economic conditions for their own businesses are getting better: 30 percent of them say the climate will improve in the next six months, compared to only 20 percent in March. Of the remaining respondents; 48 percent say the climate is getting worse, but that number is down from 53 percent in March.

When asked about their intentions to invest in their businesses, 23 percent say they would increase spending, up from 18 percent in March, while 43 percent still plan to decrease spending, which is down from 52 percent in March; 31 percent say they will make no changes.

Other April Confidence Indicators:

  • Small business owners who say the current economy is good or excellent was 13 percent in April, up from 7 percent in March and the highest it has been in 20 months; 29 percent rate the economy as fair, and 57 percent think it's poor.
  • The outlook for the direction of the economy improved: 31 percent say it is getting better, up from 22 percent in March; while 52 percent say it's getting worse, down from 58 percent the prior month; and 14 percent aren't sure.
  • Cash flow issues eased slightly: Fewer owners said their businesses encountered temporary cash flow issues in the past 90 days that caused them to hold off on paying some bills: 51 percent said they did not experience cash flow issues in April, compared with 47 percent in March. Those owners who had cash flow issues dropped from 46 percent in March to 45 percent in April.

POLL: Social Networking Continues to Grow

Small Business Watch surveys since 2007 have shown an increasing number of small businesses using the Internet to sustain and grow their businesses.

"Social networking for business purposes is growing," Scully said. "With such small operations, small business owners don't need a long time to tell whether something is good or bad for business, so the social networking numbers will be the ones to watch."

In 2007, 22 percent of small business owners told the Watch that they were members of an online social networking community such as Facebook, Linked-In, My Space or Twitter. Three years later, that number has more than doubled to 48 percent as of this month. Of those who are social networking, 55 percent say they have used it to promote their businesses, which is up from 45 percent in 2009.

In addition, 35 percent of small business owners who told the Watch that they promote their operations through social networking use four or five sites; 43 percent use two or three sites; 20 percent use one site; and 2 percent use more than five sites.

In terms of which networking opportunities they seek most, online sites moved into second place at 14 percent, a jump from 8 percent last year. Other networking avenues include:

  • Local, in-person networking groups - 26 percent
  • In person at conferences and organized events - 10 percent
  • Chambers of Commerce or trade associations - 9 percent
  • E-mail - 6 percent
  • Other forms of networking - 15 percent
  • Not sure - 21 percent

While the number of small business owners who have Web sites increased from 37 percent in 2009 to 45 percent in 2010, there are still many who say they don't need one. Of the 55 percent of small business owners who don't have a Web site, 57 percent say their businesses will never have one; 29 percent say they will; and 14 percent are not sure.

Other Networking Poll Highlights:

  • The biggest benefit cited by members of social networking sites is getting new business leads: 32 percent of owners cited new leads as the top benefit, followed by getting business tips, 12 percent; getting new suppliers, 2 percent; getting new employees, 0 percent; benefiting in other ways, 29 percent; not benefiting at all, 22 percent; and not sure, 3 percent.
  • 78 percent of small business owners are not members of their local chambers of commerce.
  • 72 percent are not members of an online community specific to their industries, down from 78 percent last year.
  • 44 percent have used e-mail to promote their businesses, up from 40 percent in 2009.

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 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

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 www.discoverfinancial.com.

Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6262865&lang=en

SOURCE: Discover Financial Services

Jon Drummond
Discover Financial Services
224-405-1888
jondrummond@discover.com
or
Lauren M. Onis
Burson-Marsteller
212-614-4069
lauren.onis@bm.com