MCLEAN, Va.--()--Capital One Small Business today released the results of its Small Business Barometer survey for the fourth quarter of 2010. The quarterly survey polls small businesses across the nation, gauging their current financial condition and business projections for the next six months. Survey results for the fourth quarter of 2010 suggest that many U.S. small businesses are more optimistic about the strength of the economy and their own financial position relative to the third quarter. Most small businesses in the survey also believe their business performance will be better in 2011 compared to 2010. However, despite these positive findings, most small businesses in the survey do not plan to add additional employees to their payroll in the next six months.
“It is encouraging, however, that small businesses reported feeling confident about their ability to access credit and financing as they look ahead and plan for future growth opportunities.”
“Our survey results for the fourth quarter of this year suggest that many small businesses in the U.S. have a more positive outlook about the overall economic environment and believe 2011 will be a stronger year for their business, but many respondents remain cautious in regards to hiring in the near term,” said Robert M. Kottler, Executive Vice President of Small Business Banking at Capital One. “It is encouraging, however, that small businesses reported feeling confident about their ability to access credit and financing as they look ahead and plan for future growth opportunities.”
Outlook and Financial Performance
The survey results for the fourth quarter of 2010 suggest that the overall economic outlook of U.S. small businesses has improved relative to the third quarter and most businesses polled believe 2011 business performance will be better than it was in 2010. In addition, an increased percentage of small businesses report that they ended 2010 in a stronger financial position than where they started the year.
- In the fourth quarter, 38 percent of small businesses polled believe that economic conditions for their business are improving. This represents an 11 percentage-point increase from the third quarter. The percentage of small businesses reporting that conditions are getting worse fell in the fourth quarter to only 18 percent, the lowest level reported in 2010.
- Over half (56 percent) of U.S. small businesses surveyed expect their business performance in 2011 will be stronger than it was in 2010. Another 35 percent of businesses believe performance will be “about the same.”
- Over one-third (37 percent) of small business owners polled report that their firm’s financial position is better than it was one year ago, up seven percentage points from the third quarter of 2010 and 10 percentage points on a year-over-year basis. Forty- three percent of small businesses surveyed say that their firm’s financial position has held steady relative to one year ago. Consistent with results over the last year, only 18 percent of small businesses report that their financial position has worsened compared to one year ago.
Spending and Hiring
Most U.S. small businesses polled continue to hold off on hiring in the near term, but the percentage reporting plans to increase spending on business development or investments ticked up slightly compared to the third quarter.
- Thirty percent of small businesses polled in the fourth quarter plan to add employees to the payroll over the next six months, consistent with results from the third quarter and year-over-year. The majority (62 percent) of small businesses say that they will not hire additional employees during the same period.
- Most (64 percent) small businesses surveyed plan to keep business development and investment spending at current levels for the next six months. However, in the fourth quarter, 21 percent of small businesses reported plans to boost spending in the near term, up 5 percentage points from the third quarter but consistent with results from the fourth quarter of 2009.
Availability of Financing
The survey results suggest that most small businesses continue to have adequate access to credit and financing.
- Over three-quarters (78 percent) of U.S. small businesses surveyed report that they are able to access the financing they need, an increase of 5 percentage points from the third quarter of 2010.
- Four-out-of-five (79 percent) small business respondents say that they are not having cash flow issues.
- Only 17 percent of small businesses in the survey say that securing the capital needed to continue operations will be one of the biggest challenges they face over the next six months.
- When asked about funding sources for financing their firm’s growth, almost half (48 percent) of respondents say they will seek financing from a bank or commercial lender, consistent with past results. A decreased number of respondents say they will rely on personal savings to finance growth (29 percent compared to 39 percent in the third quarter).
Investing in E-Commerce
Capital One also polled small businesses about their e-commerce capabilities and activity. Overall, most small businesses are not using e-commerce to sell their products or services
- Nearly one-third (29 percent) of U.S. small businesses polled have a website with the ability to sell products and services online.
- Of the businesses with e-commerce capabilities, 42 percent receive less than 10 percent of their revenue from online, web or mobile sales. About one-quarter (27 percent) of respondents report that online retailing makes up 10-25 percent of total sales. Only 25 percent of businesses polled say that 25 percent or more of their firms’ sales come from e-commerce.
- Most small businesses (65 percent) plan to keep spending on e-commerce at current levels over the next six months. Only 14 percent of businesses polled plan to boost spending and 7 percent report plans to reduce e-commerce spending.
The findings reported in this release are from a telephone survey conducted by the opinion research firm, Braun Research of Princeton, NJ. Braun Research interviewed a nationally-representative sample of 1,906 for-profit small businesses in the U.S., weighted to Dunn and Bradstreet counts of all businesses nationwide by employee size and geography. Samples were also taken in New York, New Jersey, Louisiana, Texas and the Washington, D.C. metropolitan area. Small businesses are defined as those with less than $10 million in annual revenue. The interviews were conducted from December 6-30, 2010. All interviews were conducted by telephone at their places of business. One respondent per business was contacted. The margin of error is ± 2.3 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 $122.2 billion in deposits and $197.5 billion in total assets outstanding as of December 31, 2010. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients. 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. 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.