September 22, 2014

Small Business Confidence In Economy Dips Again

Things still look pretty gloomy for small business owners says the recent Discover Small Business Watch index. According to the report, there was a brief rebound in December, but economic confidence among small business owners dipped in January back down to 71.4, the same as October 2008 but not as low as prior months. Here are some of the key findings.

  • Only 19 percent of owners say they plan to increase spending on business development over the next six months, the lowest number for this category in the Watch’s 30-month history. Forty-six percent say they plan to reduce spending on business development and 30 percent are not making any changes.

What a big mistake those 46% who are reducing their spending are making. Business development is what drives small business sales and ultimately adds to the bottom line. The 19% who are increasing spending and those who are not making changes truly understand how important business development is to their business survival.

  • The number of owners who say they have experienced temporary cash flow issues in the past 90 days decreased in January to 38 percent from 42 percent in December.

This is very good news. That means these small business owners have likely found a creative way to get their cash flow issues in line so they can keep their head above water.

What I also find encouraging is that 53% of owners said they will not have to raise funds to stay in business, while 32% said they will need extra money and 15% weren’t sure. And it’s a good thing that’s the case because the banks just are not letting loose of those purse strings just yet. I think we’ll be waiting a few more months before bank funds are available again.

Interestingly, of those who indicated they would need extra money, only 18% would seek a bank loan. Most will look to friends and family (20%) and some will tap into their personal savings (19%). I’m also glad to see that only 9% will use credit cards for financing. In tight cash flow situations, credit cards are a quick road to nowhere.

What do you think of these results? Are they in line with your thinking? Let’s talk about it.

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Denise O'BerryAbout the Author: Denise O’Berry is a small business expert who provides tools, tips and advice to help small business owners be successful. O’Berry is the author of “Small Business Cash Flow: Strategies for Making Your Business a Financial Success.” Her blog can be found at Just for Small Business.

19 Comments ▼

Denise O'Berry


Denise O'Berry Denise O'Berry is a small business expert who provides tools, tips and advice to help small business owners be successful. O'Berry is the author of "Small Business Cash Flow: Strategies for Making Your Business a Financial Success." Her blog can be found at Just for Small Business.

19 Reactions

  1. Denise,

    My view is that we will have as much confidence as we make up our minds to have. :)

    — Anita

  2. What kind of data is Discover building its index on?

    I will write an upcoming piece for Open Forum on how to “predict” the future, based on historical data. You could find reliable “crystal balls” if you have decent data coming in the pipeline. I will write about an index that has been established for a long time and has been used by the leading financial players in the world.

  3. I’m with Anita, although it is a tough slog lately. But, I’m paying attention to real signals, like people calling me back and saying, yes, we’d like to nurture some leads!

    There have to be some other signals Small Biz Owners are seeing and using to stay on the path to profits.

    I’d be curious about Pay-Per-Click efforts — have those gone down or up lately? Are biz owners spending more online to make up for more expensive traditional marketing?

  4. Denise,

    You know what I’m glad reading the stats you presented in this article. I’m seeing a little light in this gloomy economy.

  5. The stats make sense given the current economic state of affairs.

    I am planning to invest more in my business but I do find myself weighing each investment more than I ordinarily would. For example, should I spend $375 for a stock photo I need and can’t find anywhere else for free or much less?

  6. Cash flow is more important than ever. This climate is an opportunity for me to really look for those areas and activities that suck cash, but don’t contribute value.

  7. Small business is the basis of the economy, so if their confidence in the economy drops = their confidence in themselves drops.

  8. It is paramount that we remain confident during these times and continue to promote and market our businesses. Now is the time to get creative and find new innovative ways to market the same goods and services.

  9. Interesting stats. I’m glad to see that there are some improvements as well as more of the same. Nice to hear that over half of businesses can still survive without the need to raise funds.

  10. It’s my belief that when the times get tough, an entrepreneur has to remain strong and vigilant, no matter what the economy is and make things happen.

    Small businesses and their revenue contribute positively to local communities much more than large businesses.

    The economy should communicate one point very clearly: be sensible, aware and ethical. Unless you’re a massive bank, owning the assets across the country, don’t spend lavishly. Spend wisely, invest wisely and think lean.

    Shameless Plug: Infusionsoft is a great way for small businesses to think lean, automate their marketing and increase revenue per customer. Happy customers are loyal customers and will come back; all you need to do is reach out to them and send them targeted follow up. More information on Infusionsoft is at http://www.infusionsoft.com/ .

    ~Joseph

  11. Couldn’t agree more with your analysis of Business Development and am glad to hear others are as optimistic as I am!

    In fact, my most recent blog psot is entitled “Opportunity Abounds in Depressed Economy” and it reflect the some of the same views.

    http://sharris.wordpress.com

  12. Cash flow is important which every one agrees in any business. There are multiple way we can genrate that. One cool way i suggest is web, second marketing online and referal stuff on web. Purpose served by the web will be on less cost and saves money of owner too :)

  13. Thanks everyone for joining the discussion!

    @Anita — I’m with you. A good bit of our success has to do with our outlook.

    @Martin — I’m not sure. You might want to hop over there and take a look. They’ve been doing this confidence index for a while.

    @TJ — Good for you. The word of the year is “focus.” I haven’t seen any recent reports on PPC. I’d be willing to bet it’s gone up. Still a lot cheaper than offline advertising. Will see if I can find something.

    @MaryGrace — I’m glad.

    @Pam — That’s a wise decision. It’s something we should always do, but in times of abundance we get a little lax.

    @Ivana — You bet. I like that term “suck cash.” Lots of small businesses need to find theirs and patch that leak.

    @Dan — I agree. Wrong approach for them too.

    @Jackie — Yep. The folks who are focusing on how to leverage what they have or creating new lines of business will survive the worst of times.

    @Amanda — I was pleased to hear that too.

    @Joseph — Ethics is a huge issue. May be why small biz is so up in arms about not getting their share of the bailout.

    @Scott — I know Scott. It amazes me that a small busness would shut down their pipeline to cash flow. Not a good thing.

    @Shashikant — Yes, the web has opened many doors and can help small business survive these tough times.

  14. Denise,

    Thanks for your reply. I will check out their site. It is Discover, the credit card?

  15. “Only 19 percent of owners say they plan to increase spending on business development over the next six months,”
    I am happy to see 19% considering everything. So many people and companies are holding money and sending employees packing.

  16. Unfortunately, this is a February report which reflects attitudes and economic conditions for December and January. The on-going problems in the small business community nationwide are degrading daily. What was happening 6 months ago, although I agree with your earlier assessment is no longer relevant. Since then we are seeing sales plummeting as much as 40% from 08 numbers. Being a conservative company only has prolonged the inevitable downfall if things don’t improve soon.

  17. @Mark Yes, it’s a moving target. When this was posted in Feb 2009 it was pretty current, but in a volatile economy it’s important to keep your finger on the pulse. Appreciate you leaving your thoughts.

  18. well this will really interupt my batman buisness

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