MasterCard Small Business Survey Finds Mixed Feelings on Business Climate

Small business owners around the world have differing views on the current business climate but feel more optimistic (28%) than not (21%) about the upcoming year, according to MasterCard’s annual Global Small Business Survey.

Small business owners globally are confident in their ability to meet financial goals and view the future outlook for their business as promising. They find running their own business is as fulfilling as they expected it to be, work a little more than 50 hours a week but spend 18 of those hours on administrative tasks. While competition was seen as the top challenge they will face next year, half of small business owners around the world feel that globalization will help their business, rather than hurt it.

These findings were the result of the MasterCard Worldwide annual Global Small Business Survey, which polled 4000 small business owners from around the world who manage businesses with 1 – 99 employees. A total of 500 respondents were surveyed from eight countries, including the United States, United Kingdom, Mexico, France, Brazil, China, Hong Kong and Australia.

"For the second year, we see a general optimistic outlook among small business owners worldwide as well as confidence in their ability to meet their financial goals," said Bruno Perreault, Group Head, Global Small Business and Mid-Sized Enterprises, MasterCard Worldwide. "But they still face issues that could hinder their growth, including a significant amount of time spent on administrative task and increased pressure from competition. This survey confirms that small business owners around the world share similar issues and concerns, but are also significantly impacted by regional influences."

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Overall Perceptions of Small Business Owners Worldwide:

• Half of small business owners are confident they will meet their financial goals this year — a 5% increase over 2005 — and continue to think their future outlook remains promising (51% in 2005 vs. 50% in 2006).
• In terms of challenges, competition was seen as the top challenge they will face in the coming year (27%), even though half of small business owners (50%) see increasing globalization as helping their business.
• There is a direct correlation between the number of hours small business owners spend on administration and the number of employees they manage. Sole business owners spend 7 hours on administrative tasks weekly, while those with 2 – 9 employees spend an average of 18 hours a week on administration. Owners with 10 or more employees spend and average of 31 hours on administration each week.

Additional Survey Findings — Regional Differences:

• Business Climate — Small business owners in Mexico are the most likely of any region (36%) to say that the current small business climate is more favorable than it was one year ago and will be more favorable (48%) a year from now than it is today. Australian small business owners are evenly split on the climate for the upcoming year, while owners in France, the UK and Hong Kong are more pessimistic about their future business climate.
• Financial Goals — Small business owners in Hong Kong are the least confident out of those surveyed — only 26% feel confident that they will meet their financial goals next year. Those in the United States and Australia are the most confident — 62% and 61%, respectively — saying they feel confident that they will meet their financial goals next year.
• Future Outlook — Small business owners in the United States and Australia are the most likely out of all small business owners to say their business’s future outlook is promising — 66% and 65% respectively say it is — while only 22% of small businesses in Hong Kong and 36% of those in France say it is.

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• Globalization — Small business owners in China (66%) and Brazil (63%) are most likely out of all the regions to see increasing globalization as helping their businesses. France is the only country to have more small business owners say that they see increasing globalization as hurting their business (36%) rather than helping it (32%).
• Challenges — This year, concern over competition rose dramatically (10% in 2005 vs. 27% in 2006) to the top challenge small business owners feel they will face in the coming year. Concern over last year’s top challenge, cost increases, fell from 26% to 22% as well as for the second most cited challenge in 2005, sales and business develop, 25% to 15%.
• Average Work Week — Globally, small business owners work an average of 54 hours a week and spend an average of 18 hours a week doing administrative tasks. The hours spent on administration rise as the number of employees rises. Small business owners in France work the most out of all of those surveyed, working an average of 59 hours a week.
• Year-end Bonuses — Out of those small business owners who are planning to give an annual bonus to their employees this year, those in Mexico, France, Brazil and China plan to give an average of 10% of their employees’ salaries, while those in the United States, United Kingdom and Australia plan to give an average of only 5% of their employees’ salaries. One in three small business owners worldwide (34%) are not planning on giving an annual bonus.
• Motivations for Running a Small Business — Globally, small business owners say that making enough money to cover living expenses (70%) and having more control over the future (64%) are important motivations for running their own business. Small business owners in Brazil are the most likely out of all those surveyed to say that providing employment (71%) and contributing to society or the community (64%) are important motivations, while small business owners in China are the most likely to say that building something that can be passed on to their family (59%) is an important motivation. Those in the United States are the most likely to say that being their own boss (67%) is an important motivation.

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• Use of Technology — Three in four small business owners around the world (78%) say that technology is important to their business’s future, with one in four (26%) saying technology is "extremely important." Small business owners in Mexico and Brazil are the most likely out of all the regions to value technology — 91% say technology is important to their businesses future.
• Job Fulfillment — Nearly half of all small business owners (48%) say that running their own business is definitely as fulfilling as they expected it to be. Small business owners in Mexico were the most likely to claim this — 65% say that running their own business is definitely as fulfilling as they expected it to be. While small business owners in China were the least likely — only 6% say that running their own business is definitely as fulfilling as they expected it to be.
• Business Control — Nearly one half of all small business owners (48%) think they have a lot of personal control to decide the future direction of their business. Small business owners in China were the least likely out of all the regions to claim this — only one in seven small business owners in China (14%) say that they feel they have a lot of personal control to decide the future direction of their business. Owners of larger small businesses with 10-99 employees are less likely to say they have a lot of control (39%) to decide the future of their business. Those in educational services (54%) are the least likely to say they have at least some control to decide the future of their business.