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Economic conditions are dampening small-business owners' confidence as more owners this month said they would curtail spending on business development, according to monthly survey results released today by Discover Financial Services. Only 19% of small-business owners Rasmussen Reports LLC surveyed for Discover's Watch report said they plan to increase spending on business development in the next six months, the lowest percentage in the Watch's 30-month history. In December, 24% of respondents said they planned to increase business-development spending. The Watch provides a monthly index measuring the relative economic confidence of 1,000 randomly selected small-business owners based on their responses to six questions. Discover established the base index value at 100 in August 2006, when the Watch began. The Watch index in January fell to 71.4, a decline of 1.4 points from December. The Watch index had showed improvement last month, rising to 72.8, up 5.3 points from November. Some 17% of small-business owners surveyed earlier this month said they see business conditions improving, down from 21% who said so last month, while only 8% of owners said they believe the economy is improving, down from 12% who did in December. The percentage of owners who reported having temporary cash-flow issues during the previous 90 days declined to 38% in January from 42% in December. In response to a non-recurring set of questions, 53% of small-business owners said they will not have to raise money to keep their businesses operating. Of those who expect to raise money, 20% said they will ask friends and family, 19% will tap personal savings, 18% will seek a bank loan, 9% will use a credit card, and 1% will apply for a home equity line of credit. Twenty-four percent will choose some other form of funding, and 10% said they were unsure of the funding source they will use. Some 85% of responding small-business owners said they do not offer health insurance to their employees, up from 77% who said so a year ago, and 36% of those who still offer health insurance said they have considered discontinuing it because of the high cost.
