Freight Factoring News: Measuring the Economic Confidence of Small Business Owners.

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Measuring the Economic Confidence of Small Business Owners

Reprinted from Discover Small Business Watch - April 2007

The Discover Small Business Watch is a monthly index of the economic confidence of the nation's 22 million businesses with five or fewer employees.

Key Takeaways from the April Watch:

Economic confidence among small business owners decreased in April, driven largely by a deteriorating outlook on economic conditions for their businesses, rising insecurity about the U.S. economy and increased cash-flow issues. The Watch dropped from 117.7 in March to 110.3 in April, marking the largest month-to-month decline since the survey's inception nine months ago.

April Highlights:

  • 32 percent of small business owners feel that economic conditions for their business are getting worse, up from 26 percent in March.
  • Small business owners who said they have encountered cash-flow issues over the past 90 days jumped to 40 percent, up from 33 percent last month.
  • 55 percent of small business owners feel economic conditions in the country are getting worse, compared to 51 percent in March. In addition, 23 percent ranked the U.S. economy as "poor," which is significantly higher than March's "poor" rating of 16 percent.
  • One bright spot in the April results is the continued increase in business development spending by small businesses. Forty-four percent of owners plan to increase spending, which is the highest percentage since the Watch began in August.

Poll Finds Small Business Owners Unaffected by Stock Market Changes

  • 68 percent of respondents indicated that changes in the stock market do not have a noticeable impact on their business.
  • 88 percent of small business owners said the performance of the stock market "occasionally, rarely or never" influences their business investment decisions.
  • 55 percent of small business owners indicated that the stock market does not reflect the economic reality they see around them on a day-to-day basis.

Customer Insights for Investment Advisors

As part of Discover Business Card's continuing effort to provide valuable customer insights to key small business segments, this month's survey polled consumers on the use of financial advisors.

  • 43 percent of consumers said they found their financial advisor through referrals from friends or family. Only 12 percent of consumers found advisors through free consultations and seminars.
  • The biggest advantage of having a paid financial advisor is the expertise they bring to making investment decisions, according to nearly half of the respondents.
  • The opportunity for financial advisors is large: 44 percent of consumers who invest do not use an advisor.
  • 48 percent of investors believe that there is as much free information available on the Internet as there is available to paid advisors.

Discover Small Business Watch Downloads
Download the Discover Small Business Watch in Microsoft® Word format below.
April 2007
Report (.doc format)   Press Release (.doc format)

Past Reports Available
March 2007 (.doc)          Press Release
February 2007 (.doc)       Press Release
January 2007 (.doc)        Press Release
December 2006 (.doc)     Press Release
November 2006 (.doc)     Press Release
October 2006 (.doc)        Press Release
September 2006 (.doc)    Press Release
August 2006 (.doc)         Press Release

Media Contact--Discover Financial Services, (1-224-405-1006)

Reports are available on the last Monday of every month.

Research Methodology

The Discover Small Business Watch is compiled each month by Rasmussen Reports, LLC, an independent research firm, based on telephone interviews and survey responses from approximately 1,000 small business owners and 4,000 potential users of small business products and services.

The questions used to compile the Small Business Watch are intended to determine small business owners' relative confidence in general economic conditions, business growth and business spending. To calculate the Watch, a numeric indicator has been created by adding data positives, subtracting data negatives and then dividing the total from the baseline month of August 2006 to determine the relative Small Business Watch value.

Factors including sampling, question wording, survey design and overall methodology may impact reported results.

  • The margin of error for the sample involving small business owners is approximately
    +/- 3.2 percentage points with a 95 percent level of confidence
  • For the sample involving potential small business users, the margin of sampling error is
    +/- 1.6 percentage points with a 95 percent level of confidence

The method for calculating the Small Business Watch is subject to revision depending on data tracking history and correlations with movements in the U.S. economy.

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