U.S. small businesses are cautiously optimistic about their business prospects, but remained concerned about the increasing costs of energy, rent and mortgages, according to the Visa Small Business Spend Insights report.


For the second quarter of 2007, Visa found that nearly half of the small business owners surveyed expect an increase in profit and revenue over the next six months. The report, which is published quarterly, provides an overall view of the U.S. small business climate by combining a poll of U.S. small businesses with the most current Visa spending data on small business cards.

“Small business owners are clearly anxious about rising costs and are addressing this issue by focusing on improving their short-term cash flow in these challenging economic times,” said Raghav Lal, senior vice president, Small Business Products, Visa USA. “Visa small business solutions may enable companies to better monitor expenses, improve cash flow and take advantage of rewards programs tailored to their individual preferences.”

Small Business Profit & Loss Overview

The report results indicate small business owners believe that the outlook for revenue, profits and cash flow is positive, based on the following key findings:

* Nearly half (44 percent) of small business owners surveyed expected an increase in revenues over the next six months, while only 13 percent expected revenue to decrease in the same period.

* 40 percent of small business owners surveyed expected an increase in profits over the next six months, while only 22 percent expected lower profits over the same period.

* Small businesses expect borrowing to remain low. Only 19 percent expect to borrow money to enhance cash flow over the next six months.

Small business optimism is somewhat tempered by concerns about rising costs. This quarter’s report found that energy remains an area of concern, with 72 percent of surveyed small business owners anticipating an increase in energy spending over the next six months.

This quarter’s survey reveals that 23 percent of small business owners are concerned that rent and mortgage costs will rise in the near future. Sole proprietors demonstrated the largest shift in concern.

Meanwhile, 23 percent of small business owners surveyed expressed concern about attracting new customers over the next six months. The average spend per transaction on Visa Business cards for advertising, management consultants/public relations, publishing and related expenses increased by 8 percent for the 12 months ending June 2007.

Finally, 58 percent of small business owners surveyed expect to slow large capital investments, while 41 percent expect to slow small capital investments.

“More than most, small business owners are sensitive to the changes in the economic climate and are prudently expecting to make real-time adjustments, such as reducing capital expenditures, in order to increase short-term cash flow,” Lal said. “This increase in cash should be available to fund investments in current business challenges, such as attracting new customers.”