The Watch recorded a slight increase in confidence about how individual business owners were faring: 30 percent say economic conditions for their businesses are improving, up from 28 percent in May; 43 percent said conditions are getting worse in June, down from 44 percent in May; and 34 percent said things are staying the same, up from 24 percent in May.
“Many small business owners are working harder than ever to make payroll, pay their bills and keep their businesses running,” said Ryan Scully, director of Discover’s business credit card. “Last month, more owners reported increasing their spending, which is good news. However, if sales are lagging this month, it’s possible that cash flow was more of an issue.”
In June, 29 percent of small business owners said they believe the overall economy is getting better, falling from 35 percent in May; 51 percent say the economy is getting worse, steady from the previous month; and 16 percent see the economy as the same, up from 12 percent in May.
Other June Confidence Indicators:
* While the number of small businesses rating the economy as poor fell to 51 percent from 56 percent in May, the percentage rating the economy good or excellent held steady at 12 percent. Thirty-seven percent rated the economy fair, up from 32 percent in May.
* 43 percent of owners said they plan to decrease spending on business development activities such as advertising, inventories, and capital expenditures, down from 46 percent in May; 25 percent planned to increase spending, no change from May; and 29 percent are planning no changes in spending on development, up from 25 percent in May.
POLL: Some Small Business Owners Feeling Negative Effects from Major World Events
When asked to rate separately the impact on their businesses of the performance of the U.S. stock market, the oil spill in the Gulf of Mexico and the European debt crisis:
* 51 percent of small business owners said the stock market was having some negative impact on their businesses, while 37 percent said it had no impact at all, and 10 percent felt some positive effect.
* 30 percent said the gulf oil spill has had some negative effect, while 63 percent said it had no impact at all, and 4 percent indicated that it has had some positive effect.
* 40 percent have felt some negative impact from the debt crisis in Europe, while 51 percent said it had no effect, and 6 percent said they have experienced some positive effects.
POLL: Entrepreneurial Spirit Holds out Against Rough Economy
The shape of the economy over the past two years apparently hasn’t had a huge impact on the American entrepreneurial spirit – 53 percent of small business owners would not take a job for the same or more money, and fewer owners than last year would make the switch. Thirty-four percent of small business owners said in June that they would take a job, if offered, for the same or more money; which is down from 36 percent in 2009, but still up from 30 percent in 2008.
Some small business owners have considered a business change: 40 percent of respondents said they’ve recently considered modifying their business model or entering a new line of business. Among those making the consideration, 50 percent selected “The recession severely hurt my business” as their reason, with the other half choosing from the following list of reasons:
* 17 percent – “My industry is changing.”
* 11 percent – “I can’t make enough money in my current business.”
* 5 percent – “There’s too much competition in my industry.”
* 5 percent – “I’m losing interest in my current business.”
* 8 percent – “Some other reason.”
The two main reasons for becoming a small business owner have remained the same since the Watch first asked the question in 2007 – more flexibility with their time and being their own bosses. This year 50 percent of small business owners selected one of those two reasons, compared to 46 percent in 2007. As for the other reasons they had to choose from compared to 2007:
* 16 percent said they did it for a “feeling of accomplishment,” up from 14 percent
* 10 percent cited “making more money,” down from 19 percent
* 9 percent said they “needed a job,” up from 8 percent
* 12 percent cited “some other reason,” up from 11 percent
When asked what it would take for them to consider selling their business: 41 percent said they would never sell; 27 percent aren’t sure; 18 percent would need a premium on what they’ve invested; 11 percent would need enough to pay back what they’ve invested; and 3 percent would take a discount on what they’ve invested to exit the business.
The main challenges of running a small business remain consistent over last year, with 34 percent of owners citing finding new business as their main challenge, down from 40 percent in 2009, followed by the difficulties of:
* 23 percent – Government rules and regulations
* 11 percent – Managing cash flow
* 7 percent – Getting good employees
* 4 percent – Managing healthcare and other insurance costs
* 11 percent – Some other challenge
* 5 percent – Not sure
A majority of small business owners continue to see running their businesses as riskier than working for a large company, but this year only 31 percent said starting a business was riskier than they originally thought it would be, down from 47 percent who believed so in 2009.
