“More than most, small business owners are susceptible to the effects of rising costs and fluctuations in the economy. As such, they need to hedge against spending increases and economic uncertainty by making smart IT investment decisions and utilizing cash management tools such as payment cards,” said Wayne Best, senior vice president, Business and Economic Analysis, Visa USA.
Small Business Spending Outlook
The report identified the following four key spending areas that are currently of top concern among small businesses:
Energy
* 75 percent of the small business owners surveyed believe that energy spending will increase over the next six months.
* The average spend per transaction on Visa Business cards for energy-related expenditures increased 18 percent for the 12 months ending February 2007.
Healthcare
* 34 percent of respondents expressed concern that cost of health care insurance will increase over the next six months, with this concern being the highest among small businesses with two or more employees.
* The average spending on Visa Business cards on healthcare-related expenditures increased 17 percent for the 12 months ending February 2007.
Taxes
* 20 percent of respondents expressed concern about rising taxes in the next six months.
* The average spending on Visa Business cards on tax preparation services and tax payments increased by 80 percent for the 12 months ending February 2007.
* Purchases for tax payments and tax preparation have an average spend per transaction that is three times the size of the average purchase for all Visa Business card transactions.
Attracting Customers
* 22 percent of small businesses surveyed expressed concerns about attracting new customers over the next six months.
* The average spending on Visa Business cards for advertising, management consultants/public relations, publishing and related expenses increased by 56 percent for the 12 months ending February 2007, twice the growth rate of expenditures in all categories.
Small Business Profit & Loss Overview
The report results indicate that the future outlook for both small business revenue and profits is positive based on the following key findings:
* Nearly half (45 percent) of small business owners surveyed expected an increase in revenues over the next six months, compared with only 11 percent who expected a revenue decrease over the same period.
* 39 percent of small business owners surveyed expected an increase in profits over the next six months, compared with 19 percent who expected lower profits over the same period.
* In terms of cash flow, only 17 percent of those surveyed expect that they will need to borrow more money in the next six months, while just 18 percent expect to have issues collecting payment in the same timeframe.
“Visa, as a leading provider of small business payment products and processor of financial transactions, has a unique window into the spending habits of U.S. small businesses,” said Raghav Lal, senior vice president, small business, Visa USA. “By comparing small business attitudes with current Visa spending, we can provide insights into small business confidence and outlook. This analysis enables Visa and our member financial institutions to deliver small businesses with payment solutions tailored more closely to their needs.”
