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Survey Provides Tips for Small Business Owners and Managers

The results of a survey of 501 small business owners and managers conducted in February show several of today’s top concerns of small businesses. Interestingly, the survey also reveals how small business owners and managers have addressed these concerns, providing helpful information for others facing similar issues.

The survey, called the OPEN Small Business Network^SM 2002 Monitor and commissioned by American Express, indicated that surviving the economic slowdown is small businesses’ top concern.

Meeting economic challenges. According to the survey, small businesses have responded to recent economic challenges by using a variety of strategies, such as better servicing customers to gain a competitive advantage (66 percent), and cutting business expenses (57 percent).

Interestingly, small business owners trying to manage their businesses through the downturn were twice as likely to reduce their personal spending than to cut staff (50 percent vs 26 percent). Only one in four (24 percent) cited raising prices as a survival tactic.

Also of note is that while small businesses are concerned about surviving the economic slowdown, the overwhelming majority of the respondents (89 percent) are optimistic about the future of their businesses. In fact, nearly one in three entrepreneurs (31 percent) have increased their business investments in areas like marketing, advertising, equipment purchases and other capital investments. This positive outlook is good news considering that three out of every four new jobs are created by small businesses, according to the U.S. Small Business Administration.

Cash flow worries. Researchers found that small business owners and managers are almost as concerned about cash flow (27 percent) as they are about coping with the economy. To manage cash flow challenges, small businesses are tapping into a range of financing options. The primary one is obtaining a line of credit (21 percent), followed by using a charge or credit card (18 percent), taking out a short-term loan (18 percent) and leasing business equipment (10 percent).

These choices create the flexibility needed by small businesses. For example, the survey showed that credit and charge cards are now used in non-traditional ways such as the purchase of wholesale and office supplies, and even to purchase big ticket items like manufacturing supplies and equipment.

Survey Methodology: The OPEN Small Business Network 2002 Monitor is based on a nationally representative sample of small business and included 501 small business owners/managers, each of whom had fewer than 100 employees. The survey was conducted by telephone by International Communications Research from February 11-25, 2002.

March 28, 2002

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