NFIB

Two-Thirds of Small Businesses in New York City Report Fall

A third of small businesses nationwide and two-thirds in New York City have seen their sales drop primarily as a result of the September 11 terrorist attacks, according to a survey of small-business owners conducted by the NFIB Education Foundation.

"The attack clearly damaged small-business economic activity" said NFIB Chief Economist Bill Dunkelberg. "Small-business owners saw a significant drop in sales, but things seem to have been improving slightly in the last couple of weeks. Small businessmen and women are hunkering down, but have not made major cuts in jobs."

The survey was written by NFIB and conducted by Mason-Dixon. The national sample of 400 small-business owners was surveyed the week ending Oct. 11. The New York City sample of 300 small-business owners was surveyed the week ending Oct. 18.

Thirty-four percent said that their sales are lower since September 11. Two-thirds attributed the decline primarily to the attack and most of the remainder believed the attack is a major reason. The sales picture has slowly improved in recent weeks. Nine percent reported sales are picking up "a lot" while 37 percent say sales are picking up "a little." The 12 percent who reduced their labor forces or refused to fill job vacancies since September 11 also most often attributed their actions primarily to the attack. However, the proportion reporting negative employment activity is not abnormally high.

The survey also found that about 15 percent of small businesses plan to implement some sort of new security in the wake of the attacks. About 10 percent of businesses have been directly affected by the increased security of other businesses. Eighteen percent predict that the new emphasis on security in all facets of American life will increase the cost of doing business.

Small businesses say they will reduce business travel. Nearly a quarter of respondents said their business-related air travel would be reduced or eliminated. Nearly 20 percent immediately cancelled or postponed travel plans in response to the attacks. One-third of those did because the airports were closed.

Nine percent of small-business owners said that they were considering borrowing money to cope with the economic results of the attacks. Most experienced no difficulty obtaining the credit they needed. About 20 percent believe that government-guaranteed loans would provide a big boost to the recovery effort, and about another 40 percent said that it would have a small but positive impact.

Most small-business owners believe that business activity will return to normal next year. However, more forecast normalcy will return in the latter half of the year (36 percent) than in the first half (28 percent). Fourteen percent -- an unusually high figure -- could not or would not offer an opinion. Many of those felt a return to normal business activity is tied to the duration of the war.

The survey also featured a parallel survey of New York City small businesses. A "rule of two" seems to apply to almost every economic indicator. Almost two-thirds (65 percent) of New York small-business owners reported sales declines since Sept. 11 -- virtually twice the proportion reported throughout the country. However, half indicated that sales were picking up. Twice the number in New York as elsewhere in the country have cancelled, postponed or delayed business investment plans in the wake of the attack (27 percent compared to 13 percent). And, twice as many have reduced their labor forces or failed to fill vacancies since Sept. 11 as found elsewhere in the United States.

But on one special point, New York small-business owners did not vary from the country. Their estimates of the time it will take business activity to return to normal paralleled those of small-business owners throughout the country.

The survey also segregated tourism-impacted industries. These enterprises were more heavily impacted than small business generally, but not as severely impacted as the New York City sample.

The NFIB Education Foundation is the research and education arm of the National Federation of Independent Business (NFIB), the nation's largest small-business advocacy group. A leading voice in public policy debates, NFIB represents the consensus views of its 600,000 members before legislative and regulatory bodies in Washington, D.C., and all 50 state capitals.

CONTACT: Michelle Dimarob, (202) 554-9000