Confidence Continues to Drop for Small Businesses

America’s small businesses are fast losing confidence in the economy, according to a new survey by credit-card company Discover.

With more business owners citing concerns about cash flow and localized economic conditions, Discover’s Small Business Watch index fell 12 points in November to 76.5 from 88.5 in October.

"Fading confidence among small-business owners could be tied to their low expectations for the upcoming holiday season, as 46 percent are forecasting decreased sales and 39 percent are expecting to hold the line," said Ryan Scully, director of Discover's business credit card. "However, we saw drops in optimism across the board, so it's hardly just one factor causing the concern."

According to Discover, the mood of small-business owners has soured in November for three straight years, as economic confidence dropped from October to November in 2007 and 2008. The November 2008 index of 67.5 is the low point for Discover’s index since it started in August 2006.

Other findings include:
• 52 percent of owners say they have experienced cash-flow issues in the past 90 days, up from 44 percent in October.

• 53 percent see conditions getting worse in the next six months, up from 43 percent in October, while 19 percent feel conditions are improving, down from October’s 29 percent.

• 62 percent rate the economy as poor, up from 55 percent in October.

• Only 11 percent expect to see increased sales this year.