Visa USA Forecasts Small Business Spending to be $4.7 Trillion This Year

Friday 11 February 2005 16:14 CET | News

Visa USA introduced its small business spending forecast and segmentation analysis, providing a long-range and comprehensive view into the future growth of small business spending in the United States.

This analysis, part of Visas broader Commercial Consumption Expenditure(TM) (CCE) initiative, is the latest in a series of analytical activities to further understand business payment needs. The small business segment - businesses with under $25 million in annual sales - accounts for one-third of all expenditures by businesses in the United States. According to Visas CCE analysis, non-payroll spending by U.S. small businesses will increase an estimated 5.4 percent this year to $4.7 trillion, and expand further to reach $5.3 trillion in 2008. This study, illustrating how and where small businesses spend, helps Visa and our Members better understand and anticipate the growing payment and information needs of this segment, said David Cramer, senior vice president, commercial solutions, Visa USA. Small business spending already represents a significant percentage of all commercial expenditures - and is on the rise. Collectively, we have an opportunity to help streamline their financial processes and improve payment efficiency. Core Business Services Top Small Business Expenditures The largest share of small business expenditures (34 percent) is comprised of core business services, such as legal, accounting, insurance and shipping and mailing. Spending on these core services, which also include other professional services such as consulting, as well as temporary services, is expected to grow 5.7 percent in 2005 to $1.6 trillion. Other key components of the forecast include: -- Rent (currently 8 percent of small business spending) is anticipated to exceed $400 billion in 2005 and continue to grow at a double digit rate over the next three years. -- Advertising and marketing is expected to reach nearly $250 billion in 2005 and see a compound annual growth rate of approximately 9 percent over the next three years. -- Small businesses will spend $1.1 trillion, or 23 percent of all expenditures, on maintenance and operating supplies, including utilities, telecommunications services, computers and data processing, and office supplies in 2005. -- Travel and entertainment costs, such as airline travel, auto rental and lodging, represent nearly $100 billion of small business expenditures, and are expected to grow at nearly 6 percent per year over the next three years. -- Raw materials and manufactured goods spending will increase to $800 billion in 2005, representing 18 percent of small business expenditures. -- Other spending categories, including capital equipment and all other non-payroll expenses, are expected to reach more than $400 billion in 2005. Visa plans to update its CCE small business spending forecast on an annual basis. Small Business Spending Trends Since 2000, spending on small business general-purpose cards has grown by 20 percent annually, while volume on Visas small business products has increased by 33 percent per year during the same time period. The explanation for this industry-leading growth lies in Visas focus on tailoring its programs to address the payment and cash flow needs of small businesses by offering versatile payment products and services.

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Categories: Payments & Commerce | Payments General
Countries: World
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