NFIB: Small Businesses Face Potential Trouble

Increased Costs for Energy, Payrolls Leading to Less Optimistic Outlook

MADISON, Sept. 1, 2005 — Wisconsin’s small-business owners are increasingly less optimistic about the state’s business climate, conditions and outlook for the next quarter’s prospects, according to the Wisconsin Small-Business Conditions^SM.  The report’s data, which was released today by the National Federation of Independent Business/Wisconsin provides an overview of small-business conditions within Wisconsin and compares them with neighboring states.

A net 17 percent (percent positive minus percent negative) of the state’s small employers said the overall business environment is “supportive,” compared to a net 31 percent in June. Fewer respondents saw business conditions improving during the quarter, a net 6 percent compared to a net 19 percent last quarter. In addition, a net 60 percent characterized the outlook for business over the next three months as “good,” down from a net 68 percent in June.

“While the number of respondents saying that sales and profits were good remained stable from the second to the third quarter, there are indications of potential trouble to come,” said Bill G. Smith, state director for NFIB/Wisconsin.

Overall, a net 63 percent of small employers reported that over the last three months their purchasing costs rose, compared to a net 54 percent in June, indicating that rising energy prices were beginning to take a toll. However, the number of respondents who reported they had raised their prices was just 22 percent.  “That potentially is a serious problem for future profits,” warned Smith.

Another factor is the increase in per-employee payroll costs. A net 20 percent reported those costs have risen, compared to a net 12 percent in the previous quarter. The job outlook remained stable, as the number of respondents who reported having one or more current job openings was virtually unchanged.

The job market in neighboring Illinois, Iowa and Michigan also remained stable, while a net 23 percent of Minnesota small businesses reported having one or more openings, compared to a net 16 percent in June. However, each of the four states shared Illinois’ concern for the fourth quarter, with each reporting a significant drop in the net number of respondents who considered the outlook “good.”

The Small-Business Conditions reports are developed from surveys of small-business owners in selected states. The surveys are designed to determine the condition of the small-business economy in each particular state. The surveys are conducted every three months and results are released on the first day of the month following completion. The text of the questions and the complete response set to the survey can be found at http://www.NFIB.com/object/sbcwi0905.html      

Wisconsin Small-Business Conditions^SM, June 2005, continued

-more-

###

The Poll

NFIB’s Wisconsin Small-Business Conditions^SM is a telephone survey of a random sample of Wisconsin small employers regarding business conditions within the state. “Small employer” is defined here as employing between one and 250 people (not including the owner(s)) in a for-profit business. Each edition of the survey has a minimum of 350 respondents. The sampling error is ± 5 percentage points. Data are collected quarterly in the months of February, May, August and November, beginning in February 2005. The MRCGroup of Las Vegas conducts the survey for the NFIB Research Foundation.

The text of the questions and the complete response set to the survey can be found at http://www.NFIB.com/object/sbcwi0905.html

The Sponsor

The NFIB Research Foundation is a 501 (c)(3) organization that provides policy-makers, media, educators, small-business owners and other interested parties empirically based information on small business and small-business owners. The Foundation is affiliated with the National Federation of Independent Business, the nation’s largest small- and independent-business advocacy organization, and is located in Washington, D.C.

###