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Survey: Most small biz owners still look for recovery signs

Signs of recovery are still lagging in the small business community, according to a recent poll by Discover Small Business Watch. The monthly barometer of economic confidence dropped to 86.5 in March, down from 90.2 in February.

March Confidence Indicators

  • 54% of small business owners said the U.S. economy is getting worse, up from 41% in February and the highest since September 2010; 27% of small business owners said conditions are improving, down from 34%; and 15% said conditions are the same, down from 20% in February.
  • Small business owners’ outlook for their own businesses over the next six months also declined: 42% say conditions are getting worse, up from 40% in February; 30% say conditions are getting better, down from 33%; and 24% say conditions are the same, down from 25%.
  • 56% rate the current U.S. economy as poor, equal to February; 35% rate it fair, up from 32%; 6% rate it good, down from 7%; and 3% rate it excellent, unchanged from the prior month.
  • On the upside, fewer small business owners report temporary cash flow issues. Over the past 90 days, 52% of small business owners reported no temporary cash flow issues that affected their ability to pay bills on time, up from 46% in February; 43% of small business owners reported having cash flow issues, down from 50%.
  • 29% of small business owners plan to increase spending on business development in the next six month, up from 28% in February; 40% will decrease spending, down from 41% last month; and 27% say they will make no changes, down from 30% last month.

Profitability Hurt by Downturn, 14% May Never Recover

Seventy-seven percent of small business owners said their profitability was hurt by the economic climate of the past three years, and only 22% of that group has experienced a sustained recovery, while 57% have not, and 21% aren’t sure.

Among those who have not experienced a comeback for their businesses, 14% said they may never recover, 45% expect it to take more than a year, 16% say they will recover in six to 12 months, 10% predict three to six months and 7% are expecting a sustained recovery in the next three months. Only 1% said they are already experiencing recovery.

Two-thirds of small business owners, 66%, say it is very likely or somewhat likely that they will have to use personal assets in the next 12 months to stay in business, up from 61% who reported the same in October 2009.

The number of small business owners who extend credit to their customers has dropped: 27% said they extend credit, compared to 32% who extended credit in April 2008.

The news in March is slightly better for small business owners who extend credit: While 63% of small business owners now say customers have asked to delay a payment in the past three months, that number was up to 73% in April 2008.

Small Business Owners Feel Squeeze from Gas Prices

Seventy-six percent of small business owners say rising gasoline prices are affecting the profitability of their businesses. Of those, 90% say prices are having either a somewhat negative or very negative impact, which is on par with their sentiments in April 2008, when government statistics show that the national average for gasoline hovered near $3.42 per gallon.

See the full survey at www.discovercard.com/business/watch.


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