U.S. Small Business Confidence Index Drops 3 Points; Nationwide Concern About Economy, Regional Pessimism About Revenue Growth Drive Key SBRB Indicator South

Share Article

The Small Business Research Board (SBRB) U.S. Small Business Confidence Index (SBCI) dropped to 43 during the third quarter of 2007, a decline of three points from the previous quarter, according to a report issued here today.

When looking at small business confidence from the start of 2007 and into the third quarter, two of the three most important indicators are flat or down

    Businesses in the Northeast, Midwest and the South -- the same regions that provided the foundation for optimism in the first half of the year when the SBCI rose from 41 to 46 -- were the same regions that contributed to the third quarter decline. Each of those regions reported decreased confidence indexes signifying their concern about prospects for improvements in their business during the next 12 months, according to the report co-sponsored by International Profit Associates (IPA).

More than 800 small businesses participated in the SBRB poll.

The greatest loss of confidence is among businesses in the southern states where the confidence index dropped to 44 from the 50 recorded during the second quarter. Businesses in the western states, where the SBCI reached 47.66, were the only to report improved business prospects from the previous quarter. Businesses in the Northeast with an SBCI or 42.33 and the Midwest with an SBCI of 39.66 both were both below the national average of 43.

Nationally, 37% of the respondents said they believed the economy will improve the next 12 months which was a decline from the 43% reported during the second quarter.

The owners and managers of small businesses in each of the four regions all expressed greater concern about the economy.

The overall prospects for revenue increases for the next 12 months also contributed to the lower SBCI with 53% of the participants acknowledging they believe their sales will grow, a decrease of the 58% who said the same the previous quarter. Business in the South and West showed the greatest concern.

One improvement in the nationwide study is in hiring where 39% of the participants said they expect employment to increase during the next 12 months. This 2% increase from the summer 2007 poll was mostly supported by businesses in the western states where 45% believe they will add to their staff levels (up from 29%) and in the Midwestern states where 38% will boost employment (up from 36%).

"When looking at small business confidence from the start of 2007 and into the third quarter, two of the three most important indicators are flat or down," said Gregg M. Steinberg, President of IPA, based in Buffalo Grove, Il. IPA is the largest privately-held provider of management consulting services to small and medium-size businesses in North America.

"Only increases in hiring plans in each of the three reporting periods have buoyed the SBRB Small Business Confidence Index. Significantly, it might portend that businesses have had to and will increase hiring even though revenue is flat just to offset productivity decreases. As a result, the real crunch will be on operational efficiency," Steinberg added.

The opinions and projections about the strength of the economy, revenues and hiring looking forward 12 months are the three key ingredients to determining the SBCI and providing the basis for these quarterly and annual comparisons.

The Small Business Research Board ascertains and reports the opinions of small business owners and managers on a wide variety of topics related to their own businesses as well as national and international issues that may impact their operations. The universe of participants is developed from among small businesses across the United States. The SBRB study is a voluntary survey conducted via phone and email.

The latest information about the Small Business Research Board can be found at http://www.ipasbrb.com.

International Profit Associates, Inc. (IPA) is the largest privately-held provider of management consulting services to small and medium-size businesses in North America. IPA and its more than 1,800 professionals offer a wide range of proven and innovative methodologies to help businesses grow and prosper regardless of the economic cycle. IPA either provides directly or through its affiliated companies a comprehensive array of business advisory services, tax and estate planning services or merger, acquisition and other financial advisory services in the United States and Canada. More information about IPA can be found at http://www.ipa-iba.com.

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Raymond D. Minkus
Visit website