Capital One Bank Quarterly Small Business Barometer Survey Finds Small Business Confidence Holds Steady through Three Quarters
Nationally, fewer small businesses report plans to hire
According to Capital One’s third quarter 2012 Small Business Barometer, small business owners across the country believe economic conditions have held steady throughout 2012, and looking ahead to 2013, many (45 percent) think the U.S. economy will remain about the same. Capital One’s quarterly survey of small businesses across the nation examines general economic indicators and small business perceptions of the economic environment, gauging current financial conditions and business projections for the next six months. Of those businesses that expect to see change, optimism outweighs pessimism by five points, with 29 percent expecting to see economic conditions improve, compared to 24 percent who expect conditions to worsen over the next six months. The survey suggests, however, a growing level of caution about the economy as only 27 percent of the businesses surveyed reported plans to hire in the next six months, a drop of 10 points in a single quarter.
“Our survey results for the third quarter indicate that while economic conditions remain stable, and most small business owners report financials are holding steady, some concerns and uncertainty remain – and may even be elevating,” said Jon Witter, President of Direct, Consumer and Small Business Banking at Capital One. “A strong close to the year could shift the dynamic and bring businesses into 2013 with more momentum, but we do anticipate some regional challenges in the Northeast as many businesses assess damage from Hurricane Sandy and work to rebuild. End of the year budgeting and planning is going to be as important this year as it ever has been.”
Financial Performance and Spending
Current economic conditions for small businesses nationally are holding steady. Nearly half (45 percent) of small businesses report economic conditions for their business are about the same, consistent with the previous quarter and the same as the third quarter of 2011. However, roughly a third (29 percent) of small businesses report improving economic conditions. This is eight points lower than last quarter and four points lower than the third quarter of 2011. While a majority of small businesses believe economic conditions are the same or improving, a quarter of small businesses (24 percent) believe economic conditions are getting worse.
Although 40 percent of small businesses report their firm’s financial position has improved compared to a year ago, the number who report their business is doing worse reached a two-year high (23 percent). This is an eight point increase from the previous quarter and the third quarter of 2011. Thirty-five percent of small businesses report their firms’ financial positions are about the same, a six point decrease from last quarter and a 14 point decrease from the third quarter of 2011.
Economic Outlook and Business Pressures
Small business owners’ economic outlook for the next six months has worsened compared to a year ago. The national business outlook is a measure of business prospects over the next six months on a scale of significantly worse (1) to significantly better (10). Even though they are faced with steady current economic conditions, due to worsening financial performance, small businesses rate the national business outlook at 5.7 out of 10 points, 0.3 points lower than the 6.0 from the previous quarter. Conversely, all of the key business indicators are having a greater impact on business prospects than last quarter. Price margins are expected to have the most impact on business prospects, also having the largest change since last quarter (0.3-point decrease).
Hiring & Spending Outlook
Across the country, fewer small businesses are planning to hire employees in the next six months. The majority of small businesses say they do not plan to hire employees in the next six months (69 percent). This is four points higher than the same time last year (Q3 2011) and nine points higher than last quarter (Q2 2012). Businesses reporting challenges in finding the right talent to fill available openings has decreased slightly from Q2. Fourteen percent of small businesses say they have job openings they are unable to fill, down two points from the previous quarter.
The majority of small businesses report that plans for general spending, business development and investment are steady. Sixty-five percent of small businesses plan to keep spending at the same levels, a six point increase from the third quarter of 2011, but a five point decrease from last quarter’s two-year high of 69 percent. This shift parallels the decrease in the number of small businesses that plan to increase spending. Only 14 percent of small businesses forecast increasing business development and investment spending, 11 points lower than the third quarter of 2011, but only one point lower from the previous quarter of 2012.
Availability of Financing
In the third-quarter survey, 21 percent of U.S. small businesses reported they have tried to obtain financing in the last 12 months. This figure, the third highest it has been in the past two years, is four points lower than the previous quarter and two points higher than one year ago (Q3 2011). More than two-fifths (45 percent) of small businesses report that obtaining financing is harder than it was six months ago, an increase of three points from the previous quarter. Eleven percent of small businesses report that obtaining financing is easier than it was six months ago, an increase of two points from the previous quarter.
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 1,901 interviews with owners or managers of US for-profit small businesses, defined as those under $10 million in annual revenue (1,901 interviews, 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 401). All interviews were conducted by telephone at their places of business. One respondent per business was conducted. The interviews were conducted September 21st – October 5th, 2012. The margin of error for each state's study is ± 4.37 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 InfoUSA. 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 $213.3 billion in deposits and $302.0 billion in total assets outstanding as of September 30, 2012. 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 approximately 1,000 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia. ING DIRECT, a division of Capital One, N.A., offers direct banking products and services to customers nationwide. 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.
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Steve Schooff, 212-216-8984