Eighty-five percent of small businesses report seeing growth opportunities for their companies over the next six months, up significantly from 72% in the spring of 2004 and 56% in the spring of 2003.

In addition, more than half (57%) of businesses surveyed say they expect their revenues to exceed last year's, while 35% expect revenues to remain steady. Only 7% expect revenues to fall short of last year's. On average, small business owners expect their revenues to grow by twenty percent over their current fiscal year.

"The OPEN Semi-Annual Monitor results echo what we're hearing every day from our customers: Small business owners remain positive and focused on growing their companies," said Susan Sobbott, president, OPEN from America Express. "Capital investments are up, and fewer firms are experiencing cash flow issues. This is a winning combination that positions small businesses nicely for growth."

According to the survey, small business owners are finding it easier to manage cash flow. Respondents reporting cash flow concerns dropped to 50%, down significantly from 62% in both the spring of 2004 and 2003. Of those reporting cash flow issues this year, 14% of business owners say they are most concerned about accounts receivable, while another 14% are concerned with having enough cash on-hand to win new business. They are also concerned by their ability to pay bills on time (12%) and their ability to track cash flow (8%).

Business owners say they will use a variety of tactics to address cash flow crunches, including using personal or private funds (28%), putting off purchases (18%; down sharply from 31% last spring), obtaining and using a line of credit (18%), using a charge or credit card (12%), taking out a short-term loan (11%) or leasing, rather than purchasing, business equipment (4%).

Interestingly, women small business owners are more likely to use a credit or charge card to address cash flow issues (19%), compared to small businesses overall (12%).

Focused on Growth, but Barriers Remain

With owners focused on growth, two in three (66%) small businesses report they plan to make capital investments in the next six months. That number is up compared to spring 2004 (59%) and spring 2003 (58%). Among these businesses, new technology purchases - including PCs and software - remain atop their list of capital expenditures (43%), followed by office equipment purchases (27%), office furnishings (17%), manufacturing equipment (16%) and real estate purchases (14%).

To handle business growth - or in anticipation of it - firms are competing to attract the best employees with benefits and other perks. Business with hiring plans are more likely than others to offer paid vacations (59% vs. 52% of all respondents); paid holidays (57% vs. 50% of all respondents); and flexible work hours (77% vs. 68% of all respondents).

For firms overall, however, the rising costs of those benefits may represent a challenge to business growth. Compared to a year ago, the number of firms offering paid vacations has fallen to 52%, down from 56% in 2004; the number offering paid holidays has fallen to 50%, down from 57%; the number offering 401(k) plans has fallen to 20% from 28%; and the number of firms offering life insurance is now 17%, compared to 24% last year.

In addition, respondents cite a number of barriers to securing the financing they need to grow their business. One in five (20%) say the size of their business is the greatest barrier, followed by overwhelming paperwork requirements (12%), a low credit score (11%), limited knowledge of financing resources (8%) and lack of documentation to support their loan application (6%). Sixteen percent of small businesses report having been denied a loan or line of credit.

Hiring Plans Vary Widely by Region and Business Age

Businesses with hiring plans report that their primary motivations to add employees are to handle growing business and to help increase business volume, both 76%. While optimism about growth remains very high, businesses appear to be keeping their hiring plans in check. Overall, 44% of small businesses report plans to hire over the next six months, steady compared to spring 2004 (46%), but up from 35% reported in spring 2003.

Small business hiring plans vary widely by region and by a company's age. Businesses in the West are more likely to have hiring plans (56%) than those in the North Central states (46%), the South (44%) and those in the North East (30%). In addition, start-up enterprises, defined as companies in business for three years or fewer, are more likely to have hiring plans than companies in business for more than three years (64% vs. 40%).

Business Owners Cite Investments, Networking and Mentors as Routes to Growth

According to the survey, 44% of small business owners plan to grow their businesses by branching into new markets, introducing new products or services and increasing investments in the business.

Nearly half of women-owned businesses (49%) will grow their firms in a similar manner.

Among business owners needing help with general business decisions or searching for ideas to grow their businesses, 52% turn to individual mentors; 51% look to personal social networks; 44% use trade industry associations; 36% use a business advisor; 31% use the Internet and 27% use a local chamber of commerce.

Women business owners are even more likely to cite mentors as a source for strategic guidance on general business decisions (63%), compared to small business overall (52%).

"Women entrepreneurs face unique challenges to starting and growing their companies," said Sobbott. "For example, our findings show that women respondents are more likely to report cash flow concerns. So they're turning to a variety of sounding boards for strategic guidance. Mentors, as well as networking organizations, serve as powerful resources who are helping women find the right answers."

Asked to name the business skills they would most like to enhance, respondents focused on customer service as the top choice at 71% - up significantly from 50% in spring of 2004 - followed by marketing (67% up from 52% a year ago), financial management/planning (49% up from 43% a year ago), decision making (45% up from 32%), negotiation (42% up from 33%) and human resources (29% up from 22%).

Continuing a steady, upward trend, 82% report using the Internet for e-commerce, up from 73% last spring, 22% in 2003 and 23% in 2002. The number of companies that report using the Internet for business activities remains steady (82%), compared to spring of last year (83%). Similar to last year, businesses report using the Internet to make travel plans (57%); purchase office supplies and equipment (50%); conduct marketing or industry research (46%); market or advertise their business (42%); service customers (42%); purchase goods from wholesalers (33%); network with other small business owners (32%); sell products or services (29%); hire staff (10%) and access capital by applying for loans or credit cards online (7%).

Survey Methodology

The OPEN Small Business Network Semi-Annual Monitor, released each spring and fall, is based on a nationally representative sample of 627 small business owners/managers of companies with fewer than 100 employees. The survey was conducted via telephone by International Communications Research (ICR) from February 9- February 22, 2005. The poll has a margin of error of +/-3.9%.

About OPEN: The Small Business Network from American Express

OPEN: The Small Business Network is a division of American Express that offers small business owners a wide range of tools, services and savings designed to meet their evolving needs, including charge and credit cards, convenient access to working capital and credit information, enhanced online account management capabilities and savings on business services from an enhanced lineup of partners. To obtain more information about the OPEN Network, visit OPEN.americanexpress.com or call 1-800-NOW-OPEN to apply for a card or loan.

American Express Company is a diversified worldwide travel, financial and network services company founded in 1850. It is a world leader in charge and credit cards, Travelers Cheques, travel, financial planning, business services, insurance and international banking.

Attention Editors: Press release and additional press materials can be found online at:

http://www.americanexpress.com/corp/pc/2005/osbn_sm1.asp