MCLEAN, Va., Oct. 15, 2013 /PRNewswire/ -- Small
businesses across the country are expressing optimism about the
national economy and expect to see continued improvement in their
financial performance over the next six months, yet more than half
(52 percent) of small businesses nationwide say current business
conditions are only fair or poor, according to Capital One's
Spark Small Business Barometer for the third quarter of
2013. The quarterly survey of small businesses measures the
economic perceptions, financial conditions and future projections
of small business owners across the nation, as well as the most
common challenges that today's small businesses face.
"Our third quarter Barometer results show a bit of a paradox.
While a growing number of small businesses are expressing optimism
about the year ahead for the national economy, and their business
financials are showing improvement, a high percentage still have no
near-term plans for growth," said Jon
Witter, President of Direct, Consumer and Small Business
Banking at Capital One. "The lack of planning for and investing in
the future – whether related to hiring, retirement or emergency
planning – is concerning and a sign of the continued constraints
and headwinds that small businesses face every day."
Results Highlights
Financial Performance:
National sentiment about
current business conditions is slightly negative, as less than half
(47 percent) of small businesses consider business conditions
excellent or good, representing a slight one-point increase
compared to the previous quarter. However, nearly two-thirds (64
percent) of minority-owned businesses report favorable business
conditions nationwide, which could be the result of 52 percent of
minority-owned businesses reporting an increase in sales over the
last six months.
Business performance overall is stabilizing and improving, with
nearly half (46 percent) of small businesses report that their
financial situation has remained the same as it was one year ago,
while 37 percent cite improvements. Since Q3 2012, the percentage
of businesses reporting worsening conditions over the past 12
months has declined by seven points, from 23 percent in 2012 to
just 16 percent in 2013. Businesses in the Midwest are more likely
to have experienced an improvement in their financial situation
since 2012, with 46 percent reporting improvements.
Along with this improvement comes a rise in short-term financial
expectations. Thirty-two percent of businesses have seen an uptick
in sales over the past six months and more businesses – 46 percent
– expect their firm's financial situation to improve over the next
six months. This is a nine-point improvement compared to Q3 2012,
when only 37 percent of businesses anticipated financial growth.
The number of businesses citing sales declines over the past six
months decreased from 25 percent to 20 percent across all
industries.
Despite the slight increase in business owners' sales
projections, only 29 percent of small business owners have plans to
hire new employees in the next six months, with over half (53
percent) citing their current level of income as the primary reason
for their decision not to hire.
Economic Outlook:
The survey found that 29
percent of businesses identify the economy as the most important
long-term challenge they face, with healthcare costs (19 percent)
and government regulations (15 percent) ranking as the second and
third most prominent long-term challenges. When asked to consider
proposed solutions to economic challenges, 24 percent of business
owners nationwide – and a dominant 66 percent of businesses in the
wholesale industry – believe that cutting state and local taxes
would be the most effective way to promote economic growth in their
state.
With that said, the national economic outlook is on the rise.
Fifty-two percent of business owners are optimistic about the
national economy over the next 12 months, which is an eight-point
increase over the national economic outlook reported in the
previous quarter.
The economic outlook for the local economy varies greatly by
region and by industry. While the outlook for the local economy is
predominantly positive on a national level, with 57 percent of
business owners citing confidence in their local market, this
represents a seven-point decline in confidence compared to Q2 2013.
On a regional level, the survey found that approximately two-thirds
of small businesses in the South and West are optimistic about the
economic outlook in their local area over the next 12 months.
Conversely, the wholesale industry is predominantly negative about
the future of the local economy, with only 29 percent anticipating
a favorable year ahead.
Following are additional key trends derived from this quarter's
survey.
- Systemic challenges continue to be recurring top-of-mind
obstacles: 28 percent identify the economy as the most
important long-term challenge. Health care costs (19 percent) and
government regulations (15 percent) round out the top three
identified long-term challenges.
- Only a fraction of small business employees have access to
an employer-sponsored retirement plan: Only 24 percent of small
businesses report offering a retirement plans for their
employees.
- Relaxing government regulations continue to be a central
theme as a key for economic growth: 24 percent believe cutting
state and local taxes would do the most to promote economic growth
in their state. Cutting back regulations (21 percent) and
encouraging tech startups and business incubators to come to the
area (20 percent) round out the top three beliefs.
- A majority of small business employers do not have plans to
hire over the next six months: 29 percent plan to hire
employees in the next six months, while two-thirds (64 percent) do
not have plans to hire in the next six months
- More than half of small businesses do not have an emergency
plan. Fifty five percent of small business owners report they
have no emergency response plan to follow in the case of an
unexpected disaster or emergency. The construction sector is the
least prepared, with 92 percent reporting no emergency plan.
"Small business is the backbone and a driving force of our local
and national economies," Witter said. "Our goal is to understand
the day-to-day challenges and constraints small business owners
face, so we can best serve them with useful products and services,
as well as access to quality resources and education."
Survey Methodology
The findings reported in this
release are from a telephone survey conducted by the opinion
research firm, Braun Research of Princeton NJ. The survey was sponsored
by APCO Worldwide of Washington DC. Braun Research
completed 2,080 interviews with owners or managers of
US for-profit businesses with under $10 million in annual revenue (300 in
New York, 300 in New
Jersey, 300 in Louisiana, 300 in Washington, D.C. and 300 in Texas and a national component of 400). There
was also an additional 180 completes in the New Orleans metropolitan area. All interviews
were conducted by telephone at their places of
business. One respondent per business was conducted. The
interviews were conducted 8/27/13-9/9/13. The margin of error for each
state's study is ± 5.66 percentage points and the
national is ± 4.9 percentage points, and when the Louisiana & New
Orleans data are combined, the 480 completes there would be
± 4.5 percentage points, at the 95% confidence level.
Interviews were monitored at random.
Sampling for this study was conducted using a national sample of
businesses drawn from Hoovers & Dun and Bradstreet. All
interviews were conducted using a computer-assisted telephone
interviewing system. Statistical weights were designed from
the United States Department of Commerce to ensure proper inclusion
of all SIC codes.
About Capital One
Capital One Financial Corporation
(www.capitalone.com) is a financial holding company whose
subsidiaries, which include Capital One, N.A., and Capital One Bank
(USA), N. A., had $209.9 billion in deposits and $296.5 billion in total assets as of June 30, 2013. Headquartered in McLean, Virginia, Capital One offers a broad
spectrum of financial products and services to consumers, small
businesses and commercial clients through a variety of channels.
Capital One, N.A. has more than 900 branch locations primarily in
New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia. A Fortune 500 company,
Capital One trades on the New York Stock Exchange under the symbol
"COF" and is included in the S&P 100 index.
Capital One Spark Business strives to add value to small
business owners through Facebook and Twitter communities with
useful tools, news, tips, and inspiration to help them in running
their businesses. Follow along on Facebook at Capital One Small
Business and on Twitter at @CapitalOneSpark.
SOURCE Capital One