MasterCard Survey Finds Small Businesses Bullish On Q4 2004

The study, conducted from Sept. 20 to Oct. 4, showed that the overwhelming majority of entrepreneurs expect business conditions to improve in 2005. The study also addressed trends in managing business expenses. The MasterCard survey polled financial decision-makers in small businesses with 25 or fewer employees and no more than $10,000,000 in annual revenue. Results point to overarching trends impacting small businesses across the United States and provide insight into differing regional perceptions. The survey addresses a variety of topics: -- Expectations for Q4 2004 and 2005 -- Managing the Business Environment -- Trends in Business Payments Expectations for Q4 2004 and 2005 Small businesses hold differing views on 2004 sales to date. One-third report that sales exceeded expectations; one-third indicate sales met expectations; and one-third state that sales have fallen short of expectations. However, anticipation for the fourth quarter of 2004 and the coming year are high, with small businesses expecting improvements during both periods. -- The overwhelming majority of small businesses (75 percent) expect 2005 to be better than 2004; 33 percent expect a substantially better year. -- More than half (53 percent) of respondents expect higher sales between October and December 2004 than in the same period in 2003. -- The Southern region is exceedingly positive on the future, with 40 percent of those surveyed expecting a substantially better year in 2005. Businesses in this part of the country also are looking to the fourth quarter to make up revenue shortfalls. Nearly 60 percent of respondents expect fourth-quarter sales to be higher in 2004 than in 2003. Managing the Business Environment A majority of small businesses anticipate few changes to result from factors such as healthcare costs and small business tax burdens. More than half (55 percent) believe these issues will not result in changes to their business models next year. Respondents in the Northeast are the most likely to stay the course (62 percent) and not make changes in preparing for 2005. -- Staffing -- One-third of small businesses surveyed expect to increase staffing in the coming year; about two-thirds (65 percent) anticipate staffing levels will remain relatively constant. -- Small businesses in both the South and Southwest expect to increase staffing in 2005, with 32 percent reporting plans to hire. -- Capital Spending -- Seventeen percent of respondents expect to increase capital spending in 2005; 14 percent anticipate decreases in spending. -- Twenty percent of respondents in the West plan to increase capital spending next year. -- Healthcare Costs -- The vast majority of respondents (80 percent) report that healthcare costs will not impact staffing levels, although 35 percent of respondents do see rising health costs as having a negative impact on business. -- Tax Liabilities -- Seventy percent of those surveyed do not anticipate tax changes that would affect their business. -- Although 36 percent of respondents view current small business tax levels as burdensome, half believe taxes levied on small businesses are appropriate. Trends in Business Payments Overall, small businesses in the United States show a growing interest in leveraging business credit and debit cards to manage company expenses. Thirty-nine percent of small businesses expect to increase business credit and debit card usage in 2005. In addition, the survey revealed the following trends in business paym