Release Date: 12/ 01/ 2005
CONTACT: Tony Gagliardi, (303) 860-1778 or Nancy St. Pierre, (214) 614-3008
DENVER, Colo. -- Small business market conditions significantly declined over the past three months and high energy prices are likely at fault, according to the Colorado Small-Business ConditionsSM report released today by the National Federation of Independent Business, the nation's largest small-business advocacy organization.
Only a net 10 percent of small-business owners surveyed said business conditions in their market area are improving, a 10-point drop from the past three months. The decline is likely attributed to the steady increase in energy prices, which have negatively impacted small businesses. According to the report, 72 percent of those surveyed said increased energy prices have had a negative effect on their business.
To financially combat higher energy costs, most small businesses are either reducing energy use or absorbing the costs of energy price hikes instead of passing costs on to consumers.
"Small-business owners have to be experts at managing budgets and finding creative ways to handle unexpected increases in overhead costs to survive and compete," said Tony Gagliardi, NFIB/Colorado state director. "It's understandable that huge increases in gas and oil prices would make business conditions more daunting."
Increased energy costs also contributed to an increase in purchase prices over the past three months. A net 59 percent of small-business owners indicated their purchase prices have increased, while only a net 21 percent have increased their selling prices.
The report also shows a drop in sales, with a net 45 percent of those surveyed terming their sales "good," down from a net 52 percent surveyed during the third quarter.
While the cost of doing business has increased, small-business owners are upgrading and making capital investments in their business. The report indicated a net 50 percent of those surveyed have made technology/process improvements, and a net 48 percent have made capital expenditures during the past quarter - marking an increase in both categories from the previous report.
| Colorado Small-Business ConditionsSM | ||||||
| This chart shows the results from Colorado and its comparative standing among selected states in the region. | ||||||
| Colo. | Ariz. | Mo. | Ore. | |||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 11/2005 | 33 | 31 | 31 | 14 | |
| Prior qtr. | 28 | 36 | 38 | 13 | ||
| Business conditions in market area | ||||||
| Net % "good" | 11/2005 | 42 | 59 | 45 | 41 | |
| Prior qtr. | 44 | 63 | 44 | 41 | ||
| Net % "improving" | 11/2005 | 10 | 28 | 5 | 15 | |
| Prior qtr. | 20 | 30 | 11 | 12 | ||
| Outlook for business | ||||||
| Net % "good" in next three months | 11/2005 | 59 | 73 | 59 | 62 | |
| Prior qtr. | 64 | 76 | 66 | 64 | ||
| Reason for optimism | ||||||
| % Sales prospects | 11/2005 | 43 | 46 | 49 | 46 | |
| Prior qtr. | 44 | 38 | 43 | 44 | ||
| % Lower costs | 11/2005 | 4 | 2 | 4 | 3 | |
| Prior qtr. | 1 | 3 | 4 | 2 | ||
| % Price increases | 11/2005 | 4 | 4 | 4 | 3 | |
| Prior qtr. | 3 | 5 | 3 | 3 | ||
| % Greater productivity | 11/2005 | 17 | 15 | 14 | 12 | |
| Prior qtr. | 10 | 13 | 12 | 11 | ||
| % Government policy | 11/2005 | 5 | 3 | 4 | 2 | |
| Prior qtr. | 4 | 3 | 6 | 4 | ||
| % Seasonal/Weather | 11/2005 | 10 | 12 | 8 | 15 | |
| Prior qtr. | 11 | 11 | 11 | 12 | ||
| Reason for pessimism | ||||||
| % Sales prospects | 11/2005 | IC* | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Cost increases | 11/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Pressure on selling prices | 11/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Lower productivity | 11/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Government policies | 11/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| Colo. | Ariz. | Mo. | Ore. | |||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 11/2005 | 45 | 62 | 43 | 51 | |
| Prior qtr. | 52 | 60 | 46 | 52 | ||
| Profits | ||||||
| Net % profits "good" | 11/2005 | 24 | 44 | 24 | 35 | |
| Prior qtr. | 33 | 46 | 27 | 34 | ||
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 11/2005 | 19 | 31 | 21 | 19 | |
| Prior qtr. | 19 | 29 | 20 | 17 | ||
| Per employee payroll cost | ||||||
| Net % "risen" | 11/2005 | 17 | 17 | 19 | 21 | |
| Prior qtr. | 12 | 20 | 13 | 25 | ||
| Employee cost pressures (greater) | ||||||
| % Wages | 11/2005 | 56 | 60 | 52 | 56 | |
| Prior qtr. | 56 | 55 | 58 | 53 | ||
| % Benefits | 11/2005 | 26 | 25 | 33 | 24 | |
| Prior qtr. | 22 | 23 | 24 | 28 | ||
| Colo. | Ariz. | Mo. | Ore. | |||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 11/2005 | 50 | 47 | 46 | 47 | |
| Prior qtr. | 42 | 43 | 42 | 45 | ||
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 48 | 45 | 45 | 50 | |
| Prior qtr. | 39 | 43 | 40 | 43 | ||
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 46 | 48 | 46 | 47 | |
| Prior qtr. | 41 | 43 | 38 | 41 | ||
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 11/2005 | 53 | 59 | 53 | 63 | |
| Prior qtr. | 52 | 63 | 54 | 54 | ||
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 11/2005 | 39 | 35 | 39 | 35 | |
| Prior qtr. | 37 | 41 | 39 | 39 | ||
| % All credit needs not satisfied | 11/2005 | 3 | 7 | 5 | 4 | |
| Prior qtr. | 5 | 4 | 6 | 7 | ||
| % No credit needs | 11/2005 | 55 | 54 | 53 | 55 | |
| Prior qtr. | 49 | 50 | 47 | 48 | ||
| Colo. | Ariz. | Mo. | Ore. | |||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 11/2005 | 59 | 58 | 63 | 64 | |
| Prior qtr. | 50 | 49 | 58 | 55 | ||
| Selling prices (last three months) | ||||||
| Net % increased | 11/2005 | 21 | 21 | 21 | 27 | |
| Prior qtr. | 17 | 16 | 18 | 20 | ||
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 11/2005 | 14 | 13 | 11 | 11 | |
| Prior qtr. | 10 | 12 | 13 | 13 | ||
| Single most important business problem | ||||||
| % Weak sales | 11/2005 | 8 | 9 | 9 | 11 | |
| Prior qtr. | 7 | 8 | 9 | 10 | ||
| % Taxes | 11/2005 | 10 | 9 | 9 | 9 | |
| Prior qtr. | 11 | 7 | 9 | 9 | ||
| % Employee quality/costs | 11/2005 | 9 | 17 | 13 | 14 | |
| Prior qtr. | 11 | 15 | 12 | 10 | ||
| % Insurance | 11/2005 | 14 | 16 | 16 | 15 | |
| Prior qtr. | 16 | 12 | 20 | 17 | ||
| % Big-business competition | 11/2005 | 13 | 9 | 16 | 9 | |
| Prior qtr. | 16 | 15 | 13 | 14 | ||
| % Inflation/Rising prices | 11/2005 | 19 | 15 | 14 | 17 | |
| Prior qtr. | 13 | 14 | 13 | 11 | ||
| % Credit availability/Interest rates | 11/2005 | 5 | 3 | 3 | 3 | |
| Prior qtr. | 3 | 3 | 4 | 3 | ||
| % Regulations/Red tape | 11/2005 | 6 | 9 | 9 | 8 | |
| Prior qtr. | 5 | 7 | 6 | 9 | ||
| Colorado Quarterly Spotlight | |
| What has been the impact on your business of the recent run-up in energy prices? | |
| Seriously negative | 19% |
| Somewhat negative | 25% |
| Slightly negative | 28% |
| No impact | 19% |
| Positive | 4% |
| Don't know/Refused | 6% |
| Total | 100% |
| What is the single most important action you have recently taken to offset rising energy costs? | |
| Raised selling prices | 15% |
| Invested in energy-conserving equipment or vehicles | 7% |
| Reduced energy use | 29% |
| Absorbed costs with lower earnings | 17% |
| Reduced non-energy costs such as payroll | 6% |
| Other | 9% |
| Don't know/Refused | 17% |
| Total | 100% |
The Poll
NFIB’s Colorado Small-Business ConditionsSM is a telephone survey of a random sample of Colorado small employers regarding business conditions within the state. “Small employer” is defined here as employing between one and 250 people (not including the owner(s)) in a for-profit business. Each edition of the survey has a minimum of 350 respondents. The sampling error is ± 5 percentage points. Data are collected quarterly in the months of February, May, August and November, beginning in February 2005. The MRCGroup of Las Vegas conducts the survey for the NFIB Research Foundation.
The Sponsor
The NFIB Research Foundation is a 501 (c)(3) organization that provides policy-makers, media, educators, small-business owners and other interested parties empirically based information on small business and small-business owners. The Foundation is affiliated with the National Federation of Independent Business, the nation’s largest small- and independent-business advocacy organization, and is located in Washington, D.C.
