NEW YORK -- One third of small business owners report the uncertain economy as the biggest challenge they face growing their businesses, the largest number in the seven-year history of the American Express OPEN Small Business Monitor, a semi-annual survey of business owners. One-quarter of business owners are challenged by the rising costs of doing business.
Economic challenges coupled with rising energy costs appear to have caused a shift in entrepreneurs’ outlook on near-term business prospects and priorities. Compared to last fall optimism is down significantly (48% vs. 64%), but has remained steady compared to six months ago (45%). Cash flow concerns have risen year over year, capital investment plans are at their lowest in the history of the Monitor and the number of business owners offering healthcare benefits to employees is also lower.
Three quarters of business owners plan to grow their businesses over the next six months, but keeping and maintaining current business and sources of revenue has surpassed growth as the top priority for entrepreneurs. To help retain their current sources of business, entrepreneurs will place a heightened focus on better servicing customers to set their business apart from competitors.
In the survey conducted by Echo Research August 12-25, the economy is cited by four in ten small business owners (38%) as the issue that will most sway their decision on the next president of the United States, followed at a distance by tax policy (cited by 18%).
To gain deeper insight into the effects of the current economy on business owners, the survey also examined three key small business sectors that serve as an indicator for the economy: manufacturing, retail and services.
Among these industries, optimism and growth are not always linked. Business owners in the services sector are among the most optimistic (53%) and most likely to have hiring plans (44%), but least likely to have plans for growth. The biggest business challenge they face is the uncertain economy. Given their reliance on consumer spending, it is no surprise that retailers are least optimistic (48%) among these business sectors.
Business owners in the manufacturing sector are among the most likely to have plans for growth; (81%) tied with counterparts in the retail sector and compared to businesses overall (74%).
- Half of manufacturers (52%) have an optimistic outlook.
- The biggest business challenge they face is rising costs and the uncertain economy (33% and 31%, respectively).
- The manufacturing sector is the most likely, when compared to both businesses overall and key business sectors, to make capital investments over the next six months (59%) and offer healthcare benefits to employees (58%).
- They are more willing to take a financial risk to grow their business and the least likely to experience cash flow concerns.
American Express OPEN Small Business Monitor, released each spring and fall, is based on a nationally representative sample of 768 small business owners/managers of companies with fewer than 100 employees. The survey was conducted via telephone by Echo Research from August 12 - August 25, 2008. The poll has a margin of error of ±3.5%.
Business Owners in Manufacturing Sector Most Likely to Have Plans for Growth
October 8, 2008