LOS ALTOS, CA - MerchantCircle, a social network of local business owners, has announced the results of its first "Merchant Confidence Index", a quarterly survey designed to gauge small business confidence in the current U.S. economy. More than 12,000 of MerchantCircle's nearly 1 million merchant members participated in the online survey and revealed the following trends.
 
Economic and Business Outlook
 
Only 23% of merchants believe that the worst of the recession is behind us, yet only 5.7% expect their businesses to fail.

• 47.3% of merchants disagree or strongly disagree with the statement "The worst effects of the recession are behind us." 23.2% of merchants believe that the worst of the recession's effects are behind us and 29.6% neither agree nor disagree.

• 73.9% of merchants believe that their business will survive the recession. 5.7% of merchants indicate they do not expect their business to survive and 20.4 neither agreed nor disagreed with the statement "My business will survive the recession."

• 42.1% of merchants said they would not start their business again in today's economic climate. When responses from retailers are isolated, the figure increased by 9.2%, with 51.3% of retailers saying they would not start their business again.

"Although recent events on Wall Street have taken an economic toll on Main Street, small business owners are a resilient group," says Darren Waddell, VP of MerchantCircle. "Let's not forget that small businesses and entrepreneurs create 2/3 of all new jobs in the U.S., and though our first merchant confidence index reveals merchants expect to be challenged during the 2009 holiday season, they are largely optimistic that their businesses will survive."
 
Holiday Outlook
 
General outlook is grim for the 2009 holiday season, with six in ten merchants saying they do not expect an uptick in sales revenues over the next 90 days (November through January) over the past 90 days (August through October). Nearly seven in 10 merchants expect 2009 to rival 2008 in terms of poor sales.

• 60.1% of small business owners expect sales revenues to decline or remain relatively the same over the next three months versus the last three months.
• 68.3% of respondents expect holiday sales to decline or remain relatively the same in 2009 versus 2008 – one of the grimmest holiday shopping seasons ever.

Employee Headcount
 
The majority of merchants expect employee headcount to remain flat or decline, but nearly 15% of small businesses expect to ramp up hiring over the next three months – a glimmer of hope for jobseekers.

• 12.6% expect to increase their headcount "somewhat" and 2.1 expect to increase headcount significantly over the next three months. 85.4% of merchants expect employee headcount to remain the same or decline over the next three months.

• 47.7% of merchants expect their marketing expenditures to remain stable over the next three months, while 26.6% expect to increase marketing spend and 25.7% expect to cut marketing expenditures.

"It is not surprising to see the apprehension of small businesses on the recovery given the breadth and magnitude of the downturn in the past year," says Mark Fratrik, Vice President at BIA Kelsey. "Nearly half of the respondents indicated that they do not think the worst effects of the recession is behind us. Only when the unemployment rate decreases and consumers start spending will these small businesses start to become optimistic. As a result of this apprehension, these companies are generally not expecting to hire many more people in the near future, nor are they expecting to spend more in marketing/advertising."
 
Current U.S. Administration and Healthcare Reform
 
The vast majority of merchants feel under-served by the current U.S. administration – nearly 75% think more could be done to help small businesses. More than half are in favor of healthcare reform, and the majority of those respondents support a public healthcare option.

• When asked if the current U.S. Administration is doing enough to help small businesses, nearly 3/4 of merchants responded negatively. Only 10.1% think the current administration is doing enough.

• 53.9% of merchants believe that the current U.S. Administration should reform healthcare while 31.6% do not think it should be reformed. 43.3% support a public healthcare option, while 38.9% are opposed to it.

• 67% of merchants do not provide healthcare for their employees, while 21% do provide healthcare.

To read the full survey and its results, visit: www.MerchantCircle.com/corporate/blog/.