Small Business Economic Confidence Continues To Slide 2 in 3 Small Business Owners Rate Economy as Poor; 3 in 4 See It Getting Worse

November 2008

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The Discover^® Small Business Watch^SM   continued to decline for the third straight month, dropping below 70.0 for the first time since the Watch was established in August 2006. The index fell 3.9 points in November to 67.5.

"Small businesses are continuing to feel pressure in this weakening economy," said Ryan Scully, director of Discover's business credit card. "The number of owners having trouble paying their bills is the highest we've seen since April and more than half of owners are cutting back on their business development plans, which is an all-time high."

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

November Highlights

• 44 percent of small business owners have experienced cash flow issues over the last 90 days, up sharply from 38 percent in October. This is the category’s highest rating since April 2008, when the same number of owners reported cash flow issues.
• Cash flow difficulties were most pronounced for small business owners whose primary customers are consumers: 49 percent said they had cash flow issues in the past 90 days that caused them to hold off on paying some bills, while only 33 percent of owners who sell business-to-business expressed the same issue.
• 51 percent plan to decrease spending on business development over the next six months, up significantly from 42 percent in October and a record-high for this category; 20 percent plan to increase spending, down slightly from 23 percent last month; and 24 percent are not planning any changes in the next six months.
• 65 percent rate the economy as poor, up 1 percent from October; only 5 percent rate the economy excellent or good, the lowest rating in this category in the history of the Watch.
• 54 percent believe economic conditions for their businesses are worsening, up from 53 percent in October; and only 15 percent feel conditions for their business are improving, which is another record low.
• The number of small business owners who think the U.S. economy is getting worse decreased by two percentage points to 72 percent in November; 8 percent feel the economy is getting better and 14 percent think it is staying the same.

Election Poll: Small Business Owners Want Obama, Congress to Make Taxes a Top Priority

• Of the issues small business owners would like to see President-elect Obama and the new Congress tackle first, 29 percent said taxes, followed by health insurance at 21 percent; energy costs, 15 percent; inflation, 13 percent; and access to capital, 12 percent.
  
• Owners remain skeptical, however, that the government can help them: 64 percent said they are not confident the federal government and Congress can address the needs of America’s small businesses.
  
• Looking back on the recent campaign, 47 percent said they felt that Joe the Plumber, aka Samuel Wurzelbacher, was a good representative of the concerns of most American small business owners, 40 percent said he was not a good representative, while 14 percent were not sure.
  
  "Although we know small business owners don’t feel represented by the federal government, that didn’t keep them from the polls," Scully said. "More than 90 percent of small business owners told us they voted in the presidential election."

Holiday Poll: 4 in 10 Small Business Owners Expecting Holiday Drop-off

• Forty percent of small business owners expect to do less business this holiday season than in 2007, while 47 percent expect it to be about the same, 9 percent expect more business this year and 4 percent weren’t sure.
  
• Most of the small business owners polled for the Watch, 63 percent, said they make less than 10 percent of their annual income during the holidays, followed by 21 percent who make about a quarter of their annual income at this time of year, and 5 percent who make less than half of their income in this season.

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 small business research methodology.