PR - Discover Survey: Small Business Economic Confidence Falls

Economic confidence among small business owners fell in August after briefly rebounding last month as small business owners expressed less confidence in the economic conditions for their business and experienced more cash flow issues, according to the Discover Small Business Watch. At 102.4, the Watch is down nearly five points from July’s 107.3 and is nearly level with the Watch’s lowest index since its inception, June’s 102.5.

"While small business owners’ feelings regarding the overall economy remain steady from last month, they are far less optimistic about the economic conditions for their own business, which is likely resulting from the cash flow concerns they are encountering," said Sastry Rachakonda, director of Discover’s small business credit card.

August Key Findings:

• 36 percent of small business owners feel that economic conditions for their business are getting better, a significant decrease from 41 percent in July.
• 41 percent said that they have experienced cash flow issues in the last 90 days, an increase over last month’s 35 percent.
• The percentage of business owners spending more on business development in the next six months fell from 38% to 34%

Business Poll: Housing Market Having a Negative Effect on Business

More than one in three small business owners (35 percent) said that recent changes in the housing market have had a significant impact on their business. Twelve percent of the business owners have applied for credit the last three months. However, 35 percent of owners said that if obtaining credit becomes more difficult, it will have an impact on their business.

Rachakonda continued: "Small business owners are clearly feeling the impact of recent shifts in the housing market. If credit becomes harder to secure, it is going to have a significant impact on their businesses."

In response to other questions about their preferences, 69 percent of small business owners also said that they prefer to have their business remain small. Thirty-eight percent of them did not plan to retire. In addition, 18 percent would transfer ownership to a family member.

"These numbers are in line with the Watch last year" Rachakonda said, "and it demonstrates the pride small business owners have in their businesses. Small Business owners value their freedom and their choice to remain small. Never to retire is an expression of their independence."

Consumer Poll: Consumers Modifying Budgets to Address Housing Market Changes

When asked what kind of impact the recent changes in the housing market have had on their personal budgets and financial decisions, more than one in three (34 percent) said the impact was significant.

"Shifts in the housing market are having an affect on consumers’ budgets," Rachakonda said. "This is likely to have an impact on small business owners. The silver lining is that our poll found that 42 percent of consumers said they expected the houses in their area to be priced higher six months from now which may help soften the impact on small business owners."