U.S. Small Business Optimism Increases According to MerchantCircle Survey

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Mountain View, California (PRESS RELEASE – February 16, 2011) – MerchantCircle, the largest online network of local business owners in the nation, issued the results of its quarterly “Merchant Confidence Index (MCI),” a survey of over 8,500 local business owners across the country, sharing their confidence levels in the current economy as well as plans for future revenue, anticipated hiring and marketing spend. The outcome of the 2010 Q4 survey indicates economic sentiment among merchants has improved for the first time since the inception of the Merchant Confidence Index in September 2009. The current MCI has jumped to 63.5 out of a possible 100, up 5.1 percent from Q1 2010.

“Finally, we are seeing glimmers of hope from merchants who have weathered the economic storm over the past year and are expecting a better economic landscape in 2011,” said Darren Waddell, vice president of marketing at MerchantCircle. “Our survey results show that for the first time in over a year, small business owners see their recent holiday revenue jump as an indicator for economic rejuvenation.”

Key survey findings include:

2010 holiday revenues surpassed expectations

  • 2010 holiday sales turned out better than expected and well over 2009 sales
  • 34.9 percent of merchants saw their 2010 holiday revenue “improve” or “improve significantly” when compared with their 2009 holiday revenue
  • When surveyed on their holiday sales outlook in Q3 2010, only 27.9 percent expected to see any increase in 2010 year-over-year revenue

Merchants now cautiously optimistic about the economy, revenues

  • The increase in revenue seen during the 2010 holiday season drove cautious optimism for future growth: merchants are now expecting to see a continued increase in revenue in 2011. 57 percent of small business owners expect revenue to “improve” or “slightly improve” over the next three months
  • When asked to rate the statement “The worst effects of the recession are behind us,” sentiment among merchants was significantly more optimistic than in Q3 2010. Nearly 27 percent of merchants believe that the worst has already passed as compared to Q3 2010, when only 19.2 percent indicated that the worst was over

Small gains seen in merchant hiring, marketing

  • Cautious optimism is reflected in merchant hiring plans: over the next three months, 91.2 percent of merchants expect to keep headcount the same or plan to add jobs to their businesses. This is up slightly from the previous quarter, when 86.4 percent of merchants expected to keep or increase headcount
  • Small business owners will also continue to spend money on marketing and advertising at their current or slightly increased rate. Nearly 85 percent of small business owners expect to increase or keep marketing expenditure the same over the next three months – an increase over Q3 2010 during which only 75 percent of merchants expected the same

About the Merchant Confidence Index

The Merchant Confidence Index is a quarterly survey conducted by MerchantCircle, the largest social network of local business owners in the U.S. with over 1.6 million members. The Index is designed to track trends in small business sentiment over time and is derived from four key questions designed to synopsize the prevailing trends among local business owners. The overall index score is based upon a standardized five-level Likert scale.

This fifth Merchant Confidence Index survey was fielded online, between January 22nd and February 3rd, 2011, and sent to a random sample of MerchantCircle’s member base of over one million local business owners. There were 8,456 total responses from local business owners across the United States. Responding businesses classified themselves as legal and financial services, automotive, health and beauty, entertainment, travel and more, with 75 percent of respondents having less than 5 employees. The survey data can be broken out by state, business type or business size (by headcount) upon request. No incentive was offered to complete the survey.

About MerchantCircle

Founded in 2005, MerchantCircle is the largest online network of local business owners in the nation, combining social networking features with a variety of free marketing tools that enable merchants to maximize their online visibility. Over 1.6 million merchants use the tools offered on MerchantCircle to create conversations with customers and connect with fellow local merchants. Local consumers can find more than 20 million business listings through http:// www.merchantcircle.com or major search engines in the U.S., Canada, United Kingdom and Australia. In addition to its free services, MerchantCircle offers a portfolio of premium online advertising solutions including search engine marketing and instant website development.

In 2010, MerchantCircle acquired TimeBridge and the popular Bloglines service to futher extend its network offerings. MerchantCircle is based in Mountain View, Calif., and funded by Rustic Canyon Partners, Scale Venture Partners, Steamboat Ventures and IAC.

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