Small Business Economic Confidence Falls: Report
While economic confidence among the nation's small-business owners continued to improve in November, according to the Discover Small Business Watch, 25 percent of small business owners said the economy is getting better in December, down from 33 percent in November. In addition, the survey found 51 percent of small-business owners said it is getting worse, up from 46 percent in November. Meanwhile, 22 percent said the economy is staying the same, compared with 17 percent the prior month.
The monthly index rose to 87.2 in November from 84.2 in October; the three-point gain was the third consecutive monthly increase and nearly 11 points higher than a year ago. According to the report, 25 percent of small-business owners expect economic conditions for their companies to improve in the first half of 2011, a drop from 28 percent a month earlier, while 26 percent expect conditions to remain the same, up from 24 percent. Additionally, 43 percent of respondents said they expect conditions to worsen, down from 44 percent in November.
Twenty-one percent of small-business owners will increase spending on business development in the next six months, down from 25 percent in November. The survey found 42 percent were planning to decrease business-development spending, up from 40 percent, and 32 percent do not plan any changes, up from 28 percent last month. In addition, 62 percent rated the current economy as poor, up from 59 percent in November, while 30 percent rate the economy fair. Just 5 percent said it was good, and 3 percent said it was excellent.
Forty-five percent have encountered temporary cash-flow issues within the last 90 days that have caused them to hold off on paying some bills, up from 43 percent in November, while 49 percent have not had cash-flow issues, and 6 percent were not sure. The number of small-business owners who have a financial plan for retirement is down from a year earlier, when the Watch first surveyed small-business owners on the topic. This year, 50 percent of small-business owners said they have a financial plan for their retirement, down from 62 percent in 2009.
At the same time, the recession has depleted the savings of 74 percent of small-business owners, the same number as last year, while 20 percent said the recession had no impact, and 5 percent saw their retirement savings increase. When asked how much of their retirement savings they had lost, fewer small-business owners than last year reported that they had lost between 30 and 50 percent of their savings. When asked how likely it is that they will have enough resources to last through retirement, 56 percent indicated it was somewhat or very likely, down 63 percent from last year.