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Study Finds Energy, Fuel Expenses Greatest Issue Impacting Small Business; Cost of Materials Second Biggest Issue
International Profit Associates Small Business Research Board Study
Indicates Most Small Businesses Unprepared for Disaster; Opinions Split
on Plan for Minimum Wage, Estate Tax Laws
Buffalo Grove, IL (August 16, 2006) -- Rising energy and fuel costs have gone
from simply being expenses that were "passed along" to the single greatest issue
impacting small businesses, according to the International Profit Associates
Small Business Research Board (IPA SBRB).
The increasing cost of materials
was cited by small business owners and managers as the second most significant
issue affecting their businesses as indicated by the most recently completed IPA
SBRB nationwide poll.
The IPA SBRB study, which tracks the confidence and views of small business
owners on economic and business issues, also found that small businesses:
- Are still under-prepared for a disaster with only 26% saying they had a
plan if an emergency situation occurred. That is only a 5% improvement from the
21% who said they had a plan in place in November, 2005;
- Have differing opinions on whether the minimum wage should be raised, with
45% agreeing it should be increased, 27% opposed to an increase and another 27%
who haven't formed an opinion; and
- Are divided about the future of the estate tax with 31% indicating it
should be abolished; 22% suggesting that it be changed, 27% comfortable with it
remaining as it is; and 19% with no opinion.
"Unquestionably, the most significant trends are those related to the impact
of rising fuel and energy costs, regardless if the cause is from actions in the
Middle East or from supplier problems at home," said Gregg Steinberg, President
of International Profit Associates (IPA), the largest privately-held provider of
management consulting and professional services to small and medium-size
businesses in North America.
The current IPA SBRB survey found that energy and fuel costs most
significantly impact 15% of small businesses responding, while cost of materials
is considered the biggest factor for 13% of the small businesses.
"As of late 2005, energy and fuel costs hadn't appeared on any previous IPA
SBRB list of most significant small business concerns," Steinberg added.
"However, energy and fuel showed up for the first time at the beginning of 2006
tied with finding quality employees for second at 13% of the respondents behind
the leading category -- general economic conditions."
"We saw a trend during 2005 in which more small businesses in each reporting
period said they were passing along the increased energy and fuel costs. In the
spring of 2005, 64% of small businesses were passing on increased energy and
fuel expenses. By summer 2005 the number of small businesses passing along the
costs rose to 72% and by year end the number had escalated to 85%," Steinberg
said.
Concurrently, the IPA SBRB Small Business Confidence Index (IPA SBCI) has
decreased during this same period. The IPA SBCI, which measures expectations
about revenue growth, the general economy and hiring looking forward 12 months
currently stands at 39.3, declining nearly 20% from 47.3 in April and from 52 at
the beginning of the year. By comparison the IPA SBCI stood at 55 at the
beginning of 2005.
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