Discover Small Business Watch: Small Business Economic Confidence Surges

RIVERWOODS, Ill.–Economic confidence among small business owners rose to its highest level in 14 months in April as more of them see the broader economy and the conditions for their own businesses improving, according to the latest Discover® Small Business WatchSM. The monthly index increased more than 10 points, rising to 88.5, up from 78.2 in March and the highest since the Watch hit 90.8 in February 2008. April’s mark represents the third consecutive monthly increase in economic confidence among small business owners.

“While we saw confidence rise almost across the board, small business owners who have been open less than two years showed the most enthusiasm for the economy that we’ve seen in that category since June 2007,” said Ryan Scully, director of Discover’s business credit card. “At the same time, the economic environment is challenging. Most owners still rate the current economy as fair or poor and continue to keep business development spending on hold.”

The number of small business owners who say the economy is getting better nearly doubled to 31 percent, up from 16 percent in March and the highest level in this category in two years. The number of owners who see the economy getting worse continued to decline. It dropped to 51 percent in April, down from 69 percent in February 2009.

Yet while the anticipation of improvement is on the rise, 91 percent of small business owners still ranked the current economy as fair or poor, a figure that has been constant for eight months.

April Highlights:

• 32 percent of owners see economic conditions for their businesses improving, up from 24 percent in March; while 40 percent see conditions getting worse, down 7 percent from the previous month; 22 percent say it’s staying the same and 6 percent weren’t sure.
• 58 percent of owners say they have not experienced temporary cash flow issues in the past 90 days that have caused them to hold off on paying some bills.
• 21 percent of owners say they plan to increase spending on business development over the next six months, unchanged from March; 46 percent plan to cut spending and 30 percent will make no changes.

POLL: Social Networking on the Rise

When asked if they were a member of any online social networking community such as Facebook, Linked-In, My Space or Twitter, 38 percent said yes, which is up from 22 percent who answered a similar question in October 2007.

“Of those who use the Internet to network, more say they use it for purposes other than getting new business leads,” Scully said. “I think this speaks to the fact that there just aren’t as many leads out there – on the Internet or elsewhere – and open-minded small business owners are trying more avenues to develop new prospects.”

When asked which networking opportunities they use most, 46 percent of small business owners identified traditional methods such as conferences, trade shows, local in-person groups or chambers of commerce. Of the remaining respondents, 16 percent cited “other” networking opportunities, 8 percent cited online sites, 7 percent said e-mail, and 22 percent said they weren’t sure.

Other Networking Poll Highlights:

• 62 percent of small business owners still do not have Web sites for their businesses. That is down from 65 percent in November 2007.
• Of those who currently belong to an online social network, only 45 percent use it to promote their businesses.
• 40 percent of owners say they have used e-mail to promote their businesses.
• 42 percent say they spend three or more hours online each week related to their businesses, 29 percent are online less than an hour, 21 percent stay on for one to three hours, and 5 percent aren’t sure.

The views and opinions expressed by small business owners and consumers who participate in the Small Business Watch survey are their own and do not necessarily reflect those of Discover Financial Services or its affiliates.

About the Small Business Watch
The Discover Small Business Watch is a monthly index measuring the relative economic confidence of U.S. small business owners who have less than five employees, a segment that consists of 22 million businesses producing more than a trillion dollars in annual receipts. The Watch is based on a national random survey of 750 small business owners. It is commissioned by the Discover Business Card, which strives to offer the best business credit card for American small businesses, and is conducted by Rasmussen Reports, LLC (www.rasmussenreports.com), an independent survey research firm. The numeric index is calculated by assigning values to responses to a set of six consistent questions. The base value of the Watch was established at 100.0 based on surveys conducted in August 2006. In addition to generating the index, the Small Business Watch surveys small business owners every month on key issues, and polls 3,000 consumers four times per year to gauge purchasing behavior and attitudes towards small businesses. For past results and survey data, visit www.discovercard.com/business/watch. For information on Discover Business Card, visit www.discovercard.com/business.

About Discover Financial Services
Discover Financial Services (NYSE: DFS) is a leading credit card issuer and electronic payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company operates the Discover Card, America’s cash rewards pioneer, and offers student and personal loans, as well as savings products such as certificates of deposit and money market accounts. Its payments businesses consist of the Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation’s leading ATM/debit networks; and Diners Club International, a global payments network with acceptance in 185 countries and territories. For more information, visit www.discoverfinancial.com.