Fewer Owners Believe Conditions Are Improving; Cash Flow Issues Constant

June 2007

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Economic confidence among small business owners fell sharply in June, as many small business owners expressed increased doubts that economic conditions for their business are improving, according the Discover^® Small Business Watch^SM.  At 102.5, the Watch is down more than seven points from May’s 110.0 and marks the lowest level of confidence expressed by small business owners since the survey’s August 2006 inception.

“While small business owners are feeling far less optimistic about economic conditions for themselves and in the larger economy, cash flow concerns are unchanged from last month, which is good news for them,” said Sastry Rachakonda, director of Discover’s small business credit card. “An interrupted cash flow is hard evidence that things could be getting tougher.”

Learn more about the research methodology for the Small Business Watch.

June Key Findings

• 34% of small business owners feel that economic conditions for their business are getting better, a significant decrease from 43% in May.
  
• Small business owners who said that they would rate the overall U.S. economy overall as “excellent” or “good” fell to 38% this month, down from 45% in May.
  
• 38% of business owners said they will spend less on business development, up from 31% in May.
  
• 54% of owners have not had cash flow issues in the past 90 days, nearly unchanged from 53% the previous month.

Poll: Independence Means More Thank Income to Those Who Start a Business

• 46% of owners started a small business to have more flexibility with their time or to be more independent. Only 19% cite making more money as the primary reason.
  
• 61% would still choose independence over working for someone else – even if offered more money than they currently make.
  
• 64% of small business owners agree that it is riskier to run a business than to work for a large company.
  
• When asked about the biggest challenge facing their business, 28% cite finding new business and 21% cite managing cash flows.
  
• Slightly more than half of small business owners (51%) believe that most people can still achieve the American dream, making them more optimistic than the 41% of adults who feel the same.
  
  “Starting a small business is about being independent even if it means working harder and taking more risks,” Rachakonda said. “Almost one of every two small business owners says he or she started their own business to have more flexibility or to be their own boss. Only one in five cite making more money as the primary reason for becoming a small business owner. ”
  
  “This month’s poll found that more than a third of adults are interested in starting their own business some day,” Rachakonda said.  “In spite of long hours and high risks, the freedom and independence that comes from being the boss keeps the entrepreneurial spirit alive in America.”

The Discover Small Business Watch is a monthly index of the economic confidence of the nation's 22 million businesses with 5 or fewer employees. Learn about our research methodology.