Small business confidence rising

Discover Financial Services LLC's April 2009 Discover Small Business Watch indicated small-business owners are more confident about the economy than they have been in more than a year. The monthly index rose to 88.5, which is the highest it's been since it hit 90.8 in February 2008.

Thirty-one percent of business owners surveyed said the economy is improving, which is twice the number who noted improvement the preceding month. This represents the largest percentage in this category in two years. Despite this optimism, 91 percent of small-business owners described the current economy as fair or poor.

Ryan Scully, Director of Discover's Business Credit Card said, "While we saw confidence rise almost across the board, small business owners who have been open less than two years showed the most enthusiasm for the economy that we've seen in that category since June 2007." He speculated that the more experienced business owners aren't as reactive to developments in the media.

Scully said there's an old saying that, "'small businesses lead you into a recession,' meaning they indicate when a recession is going to come, and 'they lead you out of a recession.' I'm not saying that the recession is over, but I think this is exciting for a lot of people in the media because there is, for the first time in 14 months, an uptick in confidence in small-business owners and their perception of the economy."

Social networking numbers

Each time Discover conducts its Small Business Watch, it includes an extra topic. April's featured topic was networking. Thirty-eight percent of small-business owners polled said they participate in an online social networking community (Facebook, LinkedIn, MySpace or Twitter). Only 16 percent answered in the affirmative to a similar question in October 2007.

"I think this speaks to the fact that there just aren't as many leads out there – on the Internet or elsewhere – and open-minded small-business owners are trying more avenues to develop new prospects," Scully said.

Of respondents in the 18- to 29-year-old age group, 61 percent were members of online social networking sites compared to only 20 percent of those 60 to 64 years of age. Eighty percent of small-business owners who had been in business fewer than two years said they network online as opposed to 20 percent of those who had been in business more than 10 years. Only 62 percent of the small-business owners surveyed had Web sites.

According to Scully, the social networking poll results make sense because most small-business owners depend on their local networks, whereas the online marketing model is more for corporate, Wall Street businesses and e-commerce.

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