Q3 Small Business Research Board Industry Report: Small Business Confidence Indexes Drops In Two Key US Industries; Construction / Contracting, Manufacturing Sectors More Concerned About Business Prospects Next 12 Months SBRB Reports

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The Small Business Research Board (SBRB) reported today that the outlook for small businesses in two of three key U.S. industry categories declined during the third quarter.

Small businesses are turning more pessimistic about the strength of the economy and a hope for a turnaround during the next 12 months

    The SBRB Small Business Confidence Index (SBCI) for businesses in construction and contracting as well as that for the manufacturing industry both showed declines during the third quarter from results posted during the prior period said the report co-sponsored by International Profit Associates (IPA). Of the three major industries in which the SBRB calculates a confidence index, only those in the food and beverage production category showed improved confidence.

Manufacturing companies recorded the largest drop, decreasing nearly two points to an SBCI of 38.33 from the 40.3 the previous quarter. The SBCI for construction and contracting companies dropped a single point to 47 from the 48 recorded the prior quarter. The food industry SBCI jumped to 48.5 from 40.3 during the second quarter and more than ten points from the 38.03 recorded during the first quarter of 2007.

By contrast, the overall SBCI for all small businesses responding to the quarterly survey was 43 or three points lower than the 46 recorded during the second quarter.

The higher SBCI tabulations in all three categories were driven by sharply increased plans for hiring -- even though concerns were expressed about the strength of the U.S. economy.

Construction / contracting companies as well as manufacturing businesses both continue to show concerns about potential strength in the economy the next 12 months. The percentages of business in both sectors that said the economy would improve was flat to lower during the third quarter.

Food and beverage producers, however, are much more optimistic as expressed by the 43% who said they expect the economy to improve -- a full 10 points more than 33% during the second quarter. In addition, the same food and beverage industry respondents predict higher revenues the next 12 months and will support that contention with increased hiring.

Construction and contracting companies are projecting slightly higher revenues the next 12 months, but less hiring during the same period. Conversely, manufacturing companies are projecting lower revenues and very slight boost in hiring.

"Small businesses are turning more pessimistic about the strength of the economy and a hope for a turnaround during the next 12 months," said Gregg M. Steinberg, President of International Profit Associates. "The lower levels of confidence are a direct reflection of owners and managers who believe business conditions will get tougher and the impact on their operations will be felt even deeper."

More than 800 small business owners participated in the nationwide poll.

The universe of participants is developed from among small businesses across the United States. The SBRB study is a voluntary survey conducted quarterly.

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 SBRB conducts these studies for the benefit of small business owners and managers. The SBRB also provides opportunities for third parties to gain real time insight into the attitudes of small businesses nationwide through the independently conducted research.

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.

SBRB INDUSTRY COMPARISONS Q3 2007 vs. Prior Quarters

Copyright 2007 Small Business Research Board (SBRB)

For more information about this poll, results of previous studies or other matters related to the SBRB, please contact Raymond D. Minkus, (847) 441-4192.

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