Despite Concerns, Nearly 90% of Small Businesses Express Optimism About the Future of Their Businesses, According to the OPEN Small Business Network(SM) 2002 Monitor

Surviving the Slowing Economy is the Top Small Business Concern; Half of Small Business Owners Still Plan to Make Near-Term Capital Investments 

NEW YORK, March 12 /PRNewswire/ -- An overwhelming majority of small businesses (89%) are optimistic about the future of their businesses, although surviving the economic slowdown is their top business concern, according to the OPEN Small Business Network(SM) 2002 Monitor from American Express. However, nearly one in three entrepreneurs (31%) said they seized on opportunity created by the slowdown and actually increased their business investments in areas like marketing, advertising, equipment purchases and other capital investments.

According to the survey, small businesses have responded to recent economic challenges using a variety of strategies, like better servicing customers to gain a competitive advantage (66%) and cutting business expenses (57%).  Interestingly, small business owners trying to manage their businesses through the downturn were twice as likely to reduce their personal spending than they were to cut staff (50% vs. 26%).  Only one in four (24%) cited raising prices as a survival tactic.

"Small business owners are a resourceful group of people who recognize the pitfalls of a slowing economy and have employed a variety of strategies that they say will help them survive the downturn.  Considering that three out of every four new jobs are created by small business, this positive outlook on the future of small business is good news," said Kerry Hatch, executive director of the OPEN Small Business Network from American Express, which today introduced two new card products to help small business owners manage cash flow.

50% Plan Near-Term Capital Investment   

Overall, the OPEN Small Business Network 2002 Monitor found widespread optimism among small businesses, although there were regional differences. Optimism ran highest in the North-Central United States (92%), followed by the South (91%), the West (88%) and Northeast (83%).

Regional differences were also apparent among small businesses that said they sought to increase investments during the economic slowdown. North-Central states (36%) and the South (34%) were more likely to invest in perceived opportunities during the downturn compared to those in the West (28%) and Northeast (24%).

While surviving the slowing economy was the top business concern, cited by 28% of small businesses, 49% of small businesses still said they were likely to make additional capital investments during the next six months.  These entrepreneurs say their chief investments will likely be computers and related equipment (41%), manufacturing and production equipment (35%), office furnishings (28%), and real estate (16%).

Surviving a downturn isn't the only concern for small businesses.  In fact, they are almost equally concerned about cash flow (27%) and also anxious about generating new leads (16%) and managing employees (9%).  Cash flow worries ran highest in the North Central (31%) followed by the West (30%), South (26%) and Northeast (23%).  It was also the top concern among businesses with revenue under $200,000.

New OPEN Small Business Network Cards Combine Flexibility with Spending Power   

The OPEN Small Business Network 2002 Monitor found that small businesses have tapped into a range of financing options to manage cash flow challenges in this economic environment.  The primary option is obtaining a line of credit (21%), followed by using a charge or credit card (18%), taking out a short-term loan (18%) and leasing business equipment (10%).

According to the survey, small businesses are using credit and charge cards in non-traditional ways like in the purchase of wholesale and office supplies.  While travel (48%) was the most common item purchased with plastic, 41% of respondents said they used their cards to buy wholesale goods such as manufacturing supplies, food products, inventory equipment or goods for re-sale. Other purchases include "everyday" business items, such as computer hardware, software and office supplies (39%), entertainment, such as restaurants, concerts or shows (36%) and business services, like shipping, reproduction services or legal advice (14%).

"Cash flow is the lifeblood of every small business," noted Hatch.  "Each of the tools mentioned, including lines of credit, credit and charge cards and short term loans, create the flexibility small businesses need to address these challenges head on.  This is particularly evident with credit and charge cards, which the survey found are being used by many small business owners to purchase big ticket items like manufacturing supplies and equipment," Hatch added.

The OPEN: Small Business Network(SM) from American Express today introduced two new card products designed to help small business owners better manage cash flow.  The Business Purchase Account(SM) is a charge card that provides no pre-set spending limit(1) with the flexibility to pay over time through a new product called the balance payment option.  In addition, Cardmembers also enjoy the first year fee-free.

The Business Management Account(SM) is a no-fee credit card that provides Cardmembers with the option of paying over time.  It offers competitive rates, including a six month, 0% rate on new purchases; an annual percentage rate as low as prime + 2.99% and 9.99% fixed rate on balance transfers for the life of the balance.

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 via telephone by International Communications Research (ICR) from February 11-25, 2002.  The poll has a margin of error of +/- 4.4%.

About OPEN: The Small Business Network from American Express   

OPEN: The Small Business Network from American Express is a unit of American Express Travel Related Services Company, Inc.  The OPEN Network offers small business owners a wide range of tools, services and savings designed to meet their evolving needs, including convenient access to working capital and credit information, instant decisioning on all card products and savings on business services from an enhanced lineup of OPEN Network partners. The OPEN Network serves nearly three million customers and is dedicated to those companies with fewer than 100 employees.  To obtain more information about the OPEN Network, visit www.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.

(1) Purchases are approved based on a variety of factors, including account history, credit records, and personal resources.  Annual fee after first year free is $75.