Dun & Bradstreet 19th Annual Small Business Survey Results
(February-March 2000)

These were two key findings of the 19th annual Dun & Bradstreet Small Business Survey. Researchers conducted 647 20-minute interviews in February and March with owners, senior executives and key decision-makers of businesses with one to 100 employees.

The study found that 54 percent of surveyed small businesses now offer health-care benefits to their employees, up from 40 percent last year. This increase comes even though companies reported an alarming surge in health-care premiums over the past year. Respondents rated rising health-care costs as the No. 1 problem that small businesses faced over the past year. In the previous survey, an insignificant number made this statement, though 29 percent said health-care costs were a "minor" problem.

The overall outlook for growth among small businesses held relatively steady since last year's survey. Most small-business owners and key decision-makers (86 percent) expressed optimism for their companies in 2000, and 71 percent expressed a positive outlook for the economy over the next 12 months. After reporting a steep decline in optimism last year, minority-owned small businesses expressed significant increases in optimism for growth in profits and staffing in 2000, and remain, overall, the most optimistic segment of the small-business community.

Other findings:

• Seventy percent of small-business owners said they now have access to the Internet, up from 57 percent last year. More than a third have a Web page or site, up from just over a quarter last year. But while 31 percent of the small-business decision-makers said the Internet had helped them, more than half said that the Web had no measurable impact on their business. The number of small businesses saying they advertised on the Web in 1999 fell 10 percent from the year-ago survey.

• Among all small businesses, a 50-hour workweek still seems to be the norm, with more than two-fifths (42 percent) claiming to work in excess of 50 hours. This is down, however, from last year, when more than half (52 percent) made this claim.

• Slightly more than one-quarter (26 percent) of small businesses surveyed do not outsource any functions. Those that do are most likely to outsource accounting and tax functions (57 percent). This is down from last year's figure (62 percent). The majority of small businesses (79 percent) expect the level of outsourcing to remain steady this year.

• The most frequent source of financing for small businesses is still commercial bank loans. Sixty-percent of the small-business owners or decision-makers responding to the D&B survey said they turned to banks to finance their business last year. Use of company credit cards has been rising slowly but steadily over the last few years as a source of small-business finance, with 29 percent saying they used company credit cards this past year, up from 27 percent in the previous survey and 24 percent the year before. Trade credit has also been on the rise, with 21 percent saying they used this form of financing during the past year, up from 19 percent a year ago and 13 percent two years ago.

• Most small businesses (76 percent) still rely on word of mouth to get new customers, although print advertising (38 percent), direct mail (21 percent), trade shows (18 percent) and Internet advertising (18 percent) were also mentioned by significant numbers of respondents. Although most of these percentages are down from last year, Internet advertising and Internet e-mail ("spam") are both up slightly.

• When asked what they see as their biggest opportunities for the coming year, the most frequently given responses were getting new customers and adding locations (15 percent each). Fourteen percent of minority-owned small businesses said increasing sales was their biggest opportunity this year. Among women-owned businesses, 13 percent responded that using the Internet presents their biggest opportunity.