SB Informer
Tuesday, April 10, 2007; 02:53 AM
The cost of health care has replaced concern about energy and fuel as
the leading issue impacting small businesses, according to the latest
Small Business Research Board (SBRB) study released here today.
International
Profit Associates (IPA) co-sponsored the study. IPA, with more than
1,800 professionals, is the largest privately-held provider of
management consulting services to small and medium-size businesses in
North America. IPA is based in Buffalo Grove, IL.
The quarterly
nationwide poll of small business owners and managers indicated that
concern about health care costs is the leading issue in three of the
four regions throughout the country and in two of the four business
categories in which individualized data is reported. Small businesses
in the Northeast, Midwest and South/Southwest reported that health care
costs were the leading concern. Construction and contracting companies
along with manufacturing firms nationwide concurred. Health care costs
tied as the second greatest issue among food service and processing
companies and was the third great concern among transportation
businesses.
Health care costs were the second greatest issue as
reported in the previous study conducted during the fourth quarter of
2006. Energy and fuel costs were identified as the leading issue during
the prior report and didn’t finish among the current study’s top three.
Concerns about economic conditions and the issue of taxes finished
second and third behind health care costs.
“It is interesting to
note that purely domestic issues such as concerns about health care and
taxes have overtaken worries about energy and fuel as the leading
issues faced by small businesses,” said Gregg Steinberg, President of
IPA.
“Energy and fuel availability and costs have leveled
considerably reducing the uncertainties and gyrating costs that caused
business owners and managers so much grief. Meanwhile, these same
businesses are being challenged by much more time sensitive beginning
of the year issues such as renewal of health care insurance coverage
with higher premium amounts and the planning, preparation and filing of
corporate and personal tax returns,” Steinberg added.
Overall,
respondents participating in the current survey are sending a mixed
message about their faith in the economy. The national SBRB Small
Business Confidence Index (SBCI) dropped nearly two points to 40.78
from the 42.71 in the prior quarter. While concern about the economy is
now the second leading issue, the slight decrease can be more
attributed to far lower revenue estimates and hiring projections for
the next 12 months. 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
quarterly and annual comparisons.
Nationally, 40.07% of the
respondents believe the economy will improve during the next 12 months,
up from the 39% from the winter 2006 quarter. However, 53.71% of the
respondents believe their revenues will increase during the same
period, a decrease of nearly five points from the 58.5% who forecasted
improved revenues late in 2006. Furthermore, small businesses are
reducing hiring projections with 28.71% of the respondents noting their
intention to increase staffing, which is a decline from the 31%
previously recorded.
“Businesses are less optimistic than the
previous quarter about the strength of the economy and recognize the
need to change their revenue projections and hiring plans. It appears
that more business owners and managers are prepared to be both
realistic in modifying their revenue predictions and pro-active in
adjusting their hiring levels should it be necessary,” said Steinberg.
Regional Results
The
confidence of small business registered declines in the Northeast by
slightly less than three points to 40.3 and in the Midwest by nearly 10
points to 32.33. The drop in the Midwest was precipitated by declines
in all three measurement categories demonstrating deep pessimism about
business prospects for the next 12 months. Meanwhile, small businesses
in the South / Southwest and Mountain States and West Cost are more
optimistic, each reporting higher SBCI tallies of 42.67 and 49.98
respectively.
Industry Results
The construction and contracting industry
reported a second consecutive quarter with an increased SBCI. The
sector’s SBCI rose to 43.4. more than one point better than its
previous 42.04 score from late last year. This is a positive sign for
the industry, which had an SBCI of under 31 points in the third quarter
if 2006.
The food service and food processing category held
steady with an SBCI of 38.03, a slight decrease from the 38.8 that was
previously recorded.
Transportation companies appear to be the
most pessimistic of the industries measured, reporting nearly a 10
point decline in its SBCI to 36.1 from 45.7. Transportation companies
12 month revenue estimates are far less than the estimates rendered in
the final 2006 study.
Manufacturing also are less optimistic
about revenues during the next 12 months as well as hiring needs. These
factors combined to drop the Manufacturing SBCI to 37.0 from 43.2.
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 universe of participants
is developed from among small businesses across the United States. More
than 550 small business owners and senior managers participated in this
SBRB poll. 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 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 www.ipa-iba.com.