Small Business Economic Confidence Remains Steady

Small business owners’ confidence in the American economy remained steady in February as rising optimism about their own business fortunes was offset by an increase in cash flow issues, according to surveys conducted for this month’s Discover® Small Business Watch(SM). At 113.4, the confidence measure was down less than a point from January’s 114.3 mark.
"Small business owners are often the first to feel the effects of changes in the larger economy, so we believe they are an important barometer to track," said Sastry Rachakonda, director of Discover’s small business credit card. "Based on our Watch numbers, economic confidence appears to be steady. However, cash flow is something to keep an eye on when it comes to small business indicators."

February Key Findings:

• Cash flow concerns crept upward across the board, especially among business owners who sell products: 40 percent of those businesses reported a significant jump in cash flow concerns, compared to 24 percent the previous month.
• Businesses are still focusing on growth: On the hiring front, 17 percent of owners plan to hire more workers in February, compared to 14 percent last month; 39 percent also plan to spend more on business development, which is up from 35 percent last month.
• 57 percent of small business owners said their operations would be more energy-efficient if the government offered incentives, such as tax breaks; and 52 percent said that the government did not do enough to help small businesses be more energy efficient.

Poll: Gasoline Is a Major Issue for 39% of owners; Most Energy Concerns Are Minor

This month’s poll found that changes in gasoline prices affect profitability for 39 percent of respondents, while the remaining owners say the effects are minor (48 percent) or of no consequence (13 percent).

When asked to choose their largest energy expense, 36 percent of small business owners cited gasoline, but an unexpected 42 percent say they have no significant energy expenses. Of the remaining, 13 percent named electricity, followed by fuel oil (6 percent) and natural gas (3 percent).

"Gasoline prices are important to four out of every 10 small business owners, and 52 percent of them expect gas prices to increase in the next three months," Rachakonda said. "It will be extremely interesting to see how this plays out in terms of small business confidence."

Among the 4,000 consumers surveyed this month, 66 percent say they expect to be charged more by small businesses when gasoline prices go up. Even more of them, 77 percent, expect large businesses to do the same.

Many consumers seem to support businesses that adopt green energy practices: 42 percent of them say they would pay higher prices for goods and services from such businesses, while 34 percent were unwilling and 25 percent were undecided.