Release Date: 12/ 01/ 2005
CONTACT: Jim Brown, (615) 874-5288
Business Environment Drops But Still One of Best in Nation
COLUMBIA, S.C. -- South Carolina entrepreneurs said sales and profits dipped toward year's end, and rising energy costs were a significant factor, according to this quarter's South Carolina Small-Business ConditionsSM. The report's data, which was released today by the National Federation of Independent Business/South Carolina, provides an overview of small-business conditions within South Carolina and compares them with neighboring states.
A net 44 percent (positive percent minus negative percent) of respondents said sales are "good," down from a net 55 percent in September and net 49 percent in June. A net 32 percent said profits are "good," down from last quarter's net 40 percent. Sixty-three percent said average prices paid for goods and services for their business increased, up from 55 percent reported in September.
Two in three respondents (67 percent) said the recent run-up in energy prices has been "negative," while 22 percent said the increases have had "no impact." Small-business owners said the single most important action taken to offset rising energy costs has been to reduce energy use (26 percent), raise selling prices (20 percent) and absorb costs with lower earnings (18 percent).
"South Carolina's economy continues to show strength, but clearly there's a change in momentum here and in other states," NFIB/South Carolina spokesperson Jim Brown said. "Cost pressures and a slippage in sales and profits contributed to this slight drop in optimism, with rising energy costs hitting many small-business owners hard and forcing them to take action."
A net 45 percent of respondents said business conditions are "good," which mirrored September's reading. However, South Carolina's business environment this quarter declined, with a net 33 percent calling it "supportive," down from a net 40 percent in September. Despite the drop, South Carolina's reading ranked No. 4 among 26 states in the survey group and No. 2 among six Southeast states, trailing only Georgia (net 36 percent) and slightly ahead of North Carolina and Virginia (both net 32 percent).
Asked to rank their most important business problem, South Carolina small-business owners cited inflation and rising prices (16 percent), insurance and big-business competition (both 14 percent), and employee quality or costs (12 percent).
| South Carolina Small-Business ConditionsSM | ||||||
| This chart shows the results from South Carolina and its comparative standing among selected nearby states. | ||||||
| S.C. | Ga. | N.C. | ||||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 11/2005 | 33 | 36 | 32 | ||
| Prior qtr. | 40 | 37 | 38 | |||
| Business conditions in market area | ||||||
| Net % "good" | 11/2005 | 45 | 46 | 38 | ||
| Prior qtr. | 45 | 52 | 43 | |||
| Net % "improving" | 11/2005 | 15 | 14 | 10 | ||
| Prior qtr. | 14 | 25 | 14 | |||
| Outlook for business | ||||||
| Net % "good" in next three months | 11/2005 | 56 | 63 | 60 | ||
| Prior qtr. | 62 | 67 | 65 | |||
| Reason for optimism | ||||||
| % Sales prospects | 11/2005 | 42 | 45 | 45 | ||
| Prior qtr. | 40 | 51 | 43 | |||
| % Lower costs | 11/2005 | 4 | 3 | 3 | ||
| Prior qtr. | 3 | 5 | 2 | |||
| % Price increases | 11/2005 | 8 | 3 | 3 | ||
| Prior qtr. | 3 | 1 | 4 | |||
| % Greater productivity | 11/2005 | 13 | 17 | 15 | ||
| Prior qtr. | 17 | 11 | 18 | |||
| % Government policy | 11/2005 | 5 | 6 | 6 | ||
| Prior qtr. | 1 | 6 | 4 | |||
| % Seasonal/Weather | 11/2005 | 10 | 8 | 12 | ||
| Prior qtr. | 11 | 8 | 9 | |||
| Reason for pessimism | ||||||
| % Sales prospects | 11/2005 | IC* | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Cost increases | 11/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Pressure on selling prices | 11/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Lower productivity | 11/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Government policy | 11/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| S.C. | Ga. | N.C. | ||||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 11/2005 | 44 | 44 | 40 | ||
| Prior qtr. | 55 | 52 | 50 | |||
| Profits | ||||||
| Net % profits "good" | 11/2005 | 32 | 28 | 24 | ||
| Prior qtr. | 40 | 35 | 32 | |||
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 11/2005 | 19 | 15 | 17 | ||
| Prior qtr. | 17 | 23 | 15 | |||
| Per employee payroll cost | ||||||
| Net % "risen" | 11/2005 | 11 | 14 | 14 | ||
| Prior qtr. | 15 | 15 | 17 | |||
| Employee cost pressures (greater) | ||||||
| % Wages | 11/2005 | 48 | 60 | 57 | ||
| Prior qtr. | 57 | 55 | 54 | |||
| % Benefits | 11/2005 | 32 | 25 | 28 | ||
| Prior qtr. | 23 | 23 | 28 | |||
| S.C. | Ga. | N.C. | ||||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 11/2005 | 45 | 41 | 41 | ||
| Prior qtr. | 37 | 46 | 44 | |||
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 42 | 41 | 43 | ||
| Prior qtr. | 41 | 36 | 43 | |||
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 43 | 40 | 44 | ||
| Prior qtr. | 43 | 42 | 42 | |||
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 11/2005 | 48 | 64 | 54 | ||
| Prior qtr. | 54 | 61 | 52 | |||
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 11/2005 | 40 | 43 | 38 | ||
| Prior qtr. | 38 | 39 | 39 | |||
| % All credit needs not satisfied | 11/2005 | 10 | 6 | 8 | ||
| Prior qtr. | 6 | 5 | 5 | |||
| % No credit needs | 11/2005 | 44 | 47 | 51 | ||
| Prior qtr. | 49 | 52 | 52 | |||
| S.C. | Ga. | N.C. | ||||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 11/2005 | 62 | 57 | 64 | ||
| Prior qtr. | 53 | 55 | 54 | |||
| Selling prices (last three months) | ||||||
| Net % increased | 11/2005 | 20 | 16 | 18 | ||
| Prior qtr. | 14 | 17 | 14 | |||
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 11/2005 | 10 | 11 | 12 | ||
| Prior qtr. | 9 | 13 | 9 | |||
| Single most important business problem | ||||||
| % Weak sales | 11/2005 | 6 | 9 | 8 | ||
| Prior qtr. | 11 | 11 | 9 | |||
| % Taxes | 11/2005 | 11 | 13 | 9 | ||
| Prior qtr. | 14 | 13 | 13 | |||
| % Employee quality/costs | 11/2005 | 12 | 13 | 11 | ||
| Prior qtr. | 7 | 13 | 10 | |||
| % Insurance | 11/2005 | 14 | 11 | 14 | ||
| Prior qtr. | 16 | 12 | 17 | |||
| % Big-business competition | 11/2005 | 14 | 14 | 16 | ||
| Prior qtr. | 11 | 15 | 14 | |||
| % Inflation/Rising prices | 11/2005 | 16 | 15 | 17 | ||
| Prior qtr. | 15 | 12 | 12 | |||
| % Credit availability/Interest rates | 11/2005 | 4 | 5 | 3 | ||
| Prior qtr. | 3 | 2 | 3 | |||
| % Regulations/Red tape | 11/2005 | 8 | 7 | 7 | ||
| Prior qtr. | 6 | 9 | 8 | |||
* Insufficient cases
| South Carolina Quarterly Spotlight | |
| What has been the impact on your business of the recent run-up in energy prices? | |
| Seriously negative | 17% |
| Somewhat negative | 24% |
| Slightly negative | 27% |
| No impact | 22% |
| Positive | 5% |
| Don't know/Refused | 5% |
| Total | 100% |
| What is the single most important action you have recently taken to offset rising energy costs? | |
| Raised selling prices | 20% |
| Invest in energy-conserving equipment or vehicles | 5% |
| Reduced energy use | 26% |
| Absorbed energy costs with lower earnings | 18% |
| Reduced non-energy costs such as payroll | 8% |
| Other | 9% |
| Don't know/Refused | 15% |
| Total | 100% |
The Poll
NFIB’s South Carolina Small-Business ConditionsSM is a telephone survey of a random sample of South Carolina 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.
