IPA Small Business Research Board

First SBRB poll reported transportation and food services.

The general economy along with costs for energy, health care and materials ranked as leading concerns. Every industry to focus on increasing revenue, decreasing expenses during 2007.

Small transportation businesses are by far the most optimistic about the economy and opportunities for revenue growth during the next 12 months while the owners and managers of small businesses in the food service industry are far less confident about their prospects, according to the latest International Profit Associates Small Business Research Board (IPA SBRB) study.

In its first comparative study of four major small business categories—manufacturing, construction and contracting, transportation and food services, the latest IPA SBRB poll clearly indicated that transportation companies believe they will be driving close to full speed ahead during the coming months. The transportation industry recorded an IPA SBRB Small Business Confidence Index (SBCI) of 45.7, which was 5.3 points greater than the 42.7 IPA SBCI index for all businesses regardless of category. Of the four industries studied, the manufacturing sector was the only other to be higher than the overall average with an SBCI Index of 43.2. The construction and contracting group reported an SBCI of 42.04 while the food services industry recorded a 38.8 SBCI.

This also was the first time that the transportation and food services sectors were individually studied by the IPA SBRB. Manufacturing and construction / contracting both were studied at least once earlier in 2006.

Interestingly, manufacturing showed a slight 1.8 point decline from the previous study while construction/contracting rebounded 11.3 points from the 31.1 SBCI that was recorded during the summer. (Analyses on the specific industries will be released before the end of 2006.)

Optimism in the transportation sector was fueled by the 45.3% of the owners and managers who see the economy strengthening and a prediction by more than 62% of the respondents that they believe their revenue will increase in 2007. Nearly 30% of the transportation category respondents predict they will increase hiring.

The improvement in the construction and contracting industry SBCI was driven largely by the reports from 64% of the respondents that they believe business will be improving in their industry. A full 50% of those respondents believe revenues will increase by more than 10% during the next 12 months.

Nearly 60% of the manufacturing businesses are forecasting revenue growth for the coming 12 months and almost 30% said they would increase hiring.

By contrast, the respondents in the food services category are more pessimistic about their revenue portions for the same period, with 50.3% looking at an increase. Nevertheless, 30.1% plan to beef up their hiring.

This is the first time that results for the IPA SBRB poll were compared on an industry basis. A study comparing regional differences of all small business was issued for the first time earlier this week. The key ingredients for determining the confidence index are attitudes about the direction of the economy, revenue predictions and hiring plans.

Despite the variance in confidence, small business owners were largely in agreement that the most significant issues they are now facing include contending with energy expenses and the continuing increases in the costs of materials as well as health care benefits. The priorities for 2007 are increasing revenue and decreasing expense.

"It is helpful to recognize the differing attitudes of business owners and managers, whether by region or by industry," said Gregg Steinberg, President of International Profit Associates, the largest privately-held provider of management consulting and professional services to small and medium-size businesses in North America.

"While we all are contending with what is essentially the same economy, businesses understand that changes impact nearly everyone differently. That requires staying abreast of even the slightest of changes and implementing specific solutions in response to the challenges," Steinberg added.