How Are Small Businesses Viewing the Economy?

The results of an International Profit Associates Small Business Research Board (IPA SBRB) survey shows that small and medium-sized food service companies, though cautiously optimistic about their near term prospects for the coming months, are the least confident of any other small business industry measured.


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The key ingredients that are used to determine the confidence index are revenue predictions, hiring plans and attitudes about the direction of the economy.

The IPA SBRB Food Service Confidence Index was established at 38.8 for the first food service poll, but in contrast, the aggregated IPA SBRB Small Business Confidence Index (SBCI) for all and medium-size businesses was 42.7 for all businesses that participated in the study. The confidence index for all the other industries, including the transportation sector, was 45.7, the manufacturing sector was at 43.2 and the construction and contracting sector was at 42.04.

Since July 2004, the IPA SBRB has been tracking the attitudes of small businesses. Last year they started to issue reports for specialized industries, with the first two measuring the attitudes of construction and contracting companies and manufacturing firms. This marked the first time that the food service and transportation industries were studied individually. Additional industries will be added this year.

The food service industry optimism level was defined by 36 percent who believe that the economy is improving, 41.6 percent who forecast no change, and 22.4 percent who see a worsening economy. As a result, 50.3 percent of respondents believe revenues for them will increase through next winter. The report also showed that 17.2 percent feel their business will grow by up to 10 percent and more than a 10 percent revenue growth increase is expected by another 33.1 percent.

Just over 36 percent of those responding believe that their revenues will not change for the majority of this year, while 13.4 percent are projecting lower revenues.

Of the food service category respondents, 30 percent predict they will increase hiring during this same period of time, 40 percent will strive to maintain their current workforce level, about 9 percent are looking to decrease hiring, and 21 percent remain uncertain of their plans.

Taxes and the expenses of health care were named as the two leading concerns for food service companies, while energy and fuel costs, concerns about the economy in general and the cost of materials rounded out the top five concerns.

As with almost every other segment, increased revenues are the main priority for 2007. Plans to decrease expenses and improvements in productivity were tied for second and facilities improvements was fourth.

"The success of food service operations demands that owners and managers do more than just keep a keen eye on presentation and taste," said Gregg Steinberg, President of International Profit Associates. "It is imperative that they focus on maintaining control on those costs that they have a direct ability to influence." Steinberg's company is the largest privately-held provider of management consulting and professional services to small and medium-sized businesses in North America.

"Food service industry operators will be much more satisfied with the longevity of their businesses and the flavor of their efforts if they both have controls in place and use them to keep a strict grip on daily food and beverage costs," added Steinberg.

The IPA's Small Business Research Board ascertains and reports the opinions of small business owners and managers on a wide variety of topics that are related to their own businesses, as well as national and international issues that may have an impact on their operations.

Poll participants provide feedback on significant issues and allow for real-time insight into the nationwide state of small businesses and the participants are gathered from among small businesses across the country. Over 500 small business owners and managers were joined in the voluntary poll which is conducted via phone and email. The poll structured and supervised through an independent resource.

Details of the study can be viewed at http://www.ipasbrb.com or http://www.biznus.net

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