Release Date: 06/ 01/ 2005
CONTACT: Gordon Dixon, (804) 377-3661 or Jim Brown, (615) 874-5288
Small-Business Owners: Business Conditions and Business Environment Among Nation's Best
VIRGINIA -- Virginia's business conditions and business outlook continue to look good, according to this quarter's Virginia Small-Business ConditionsSM. The report's data, which was released today by the National Federation of Independent Business/Virginia, provides an overview of small-business conditions within Virginia and compares them with neighboring states.
A net 48 percent (positive percent minus negative percent) of respondents this quarter said business conditions are "good," down slightly from last quarter's net 53 percent but still among the best readings in the nation. Virginia trailed Maryland (net 53 percent) but finished ahead of North Carolina (net 44 percent) and Tennessee (net 44 percent). A net 32 percent of Virginia small-business owners said the business environment is supportive, down from last quarter's net 35 percent. The figure trailed North Carolina (net 42 percent), equaled Tennessee (net 32 percent) and surpassed Maryland (net 26 percent).
"The data from NFIB/Virginia's Small-Business Conditions validates the Commonwealth is one of the nation's best places to do business," NFIB/Virginia State Director Gordon Dixon said. "Virginia's business conditions are strong and our business environment is competitive with surrounding states, which suggests more good days are ahead."
Dixon cited a net 69 percent of respondents who said their outlook for business over the next three months looks "good," down 2 percentage points from last quarter but the highest reading among its peer group of Maryland (net 67 percent), North Carolina (net 65 percent) and Tennessee (net 61 percent). A net 20 percent said business conditions are improving, down 4 percentage points from last quarter but another solid reading. Sales (net 50 percent) and profits (net 33 percent) were "good" over the last three months, up 4 and 2 percentage points, respectively, from last quarter's figures.
Dixon expressed some caution, however, as 19 percent of respondents said the average price paid for goods and services has "increased a lot," up from last quarter's 12 percent. Forty-one percent said average prices stayed "about the same," down from last quarter's 51 percent. Asked to rank their most important business problem, Virginia small-business owners cited big business competition (18 percent), inflation and rising prices (14 percent), insurance (13 percent), weak sales (13 percent) and taxes (11 percent).
Dixon said entrepreneurs are responding to rising energy prices by reducing energy (19 percent), absorbing the higher cost through lower earnings (11 percent) or doing nothing (9 percent), and increasing promotions or advertising (10 percent).
For information about the Small-Business ConditionsSM project and other small-business research studies conducted by NFIB Research Foundation, visit www.NFIB.com/research.
| Virginia Small-Business ConditionsSM | ||||||
| This chart shows the results from Virginia and its comparative standing among selected states in the region. | ||||||
| Va. | Md. | N.C. | Tenn. | |||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 5/2005 | 32 | 26 | 42 | 32 | |
| Prior qtr. | 35 | 31 | 36 | 31 | ||
| Business conditions in market area | ||||||
| Net % "good" | 5/2005 | 48 | 53 | 44 | 44 | |
| Prior qtr. | 53 | 65 | 38 | 47 | ||
| Net % "improving" | 5/2005 | 20 | 18 | 25 | 14 | |
| Prior qtr. | 24 | 25 | 27 | 21 | ||
| Outlook for business | ||||||
| Net % "good" in next three months | 5/2005 | 69 | 67 | 65 | 61 | |
| Prior qtr. | 71 | 77 | 70 | 68 | ||
| Reason for optimism | ||||||
| % Sales prospects | 5/2005 | 42 | 40 | 39 | 45 | |
| Prior qtr. | 43 | 47 | 57 | 46 | ||
| % Lower costs | 5/2005 | 4 | 4 | 3 | 2 | |
| Prior qtr. | 5 | 3 | 4 | 4 | ||
| % Price increases | 5/2005 | 3 | 5 | 4 | 15 | |
| Prior qtr. | 5 | 4 | 2 | 4 | ||
| % Greater productivity | 5/2005 | 15 | 16 | 12 | 15 | |
| Prior qtr. | 12 | 15 | 17 | 14 | ||
| % Government policy | 5/2005 | 4 | 5 | 4 | 4 | |
| Prior qtr. | 7 | 7 | 2 | 6 | ||
| % Seasonal/Weather | 5/2005 | 12 | 12 | 12 | 15 | |
| Prior qtr. | 12 | 15 | 17 | 14 | ||
| Reason for pessimism | ||||||
| % Sales prospects | 5/2005 | IC* | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Cost increases | 5/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Pressure on selling prices | 5/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Lower productivity | 5/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| % Government policies | 5/2005 | IC | IC | IC | IC | |
| Prior qtr. | IC | IC | IC | IC | ||
| Va. | Md. | N.C. | Tenn. | |||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 5/2005 | 50 | 44 | 45 | 36 | |
| Prior qtr. | 46 | 58 | 39 | 41 | ||
| Profits | ||||||
| Net % profits "good" | 5/2005 | 33 | 27 | 32 | 24 | |
| Prior qtr. | 31 | 46 | 24 | 27 | ||
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 5/2005 | 21 | 23 | 19 | 15 | |
| Prior qtr. | 27 | 23 | 20 | 16 | ||
| Per employee payroll cost | ||||||
| Net % "risen" | 5/2005 | 18 | 12 | 12 | ||
| Prior qtr. | 14 | 16 | 16 | 15 | ||
| Employee cost pressures (greater) | ||||||
| % Wages | 5/2005 | 61 | 59 | 57 | 53 | |
| Prior qtr. | 61 | 54 | 57 | 58 | ||
| % Benefits | 5/2005 | 25 | 25 | 24 | 29 | |
| Prior qtr. | 25 | 30 | 24 | 24 | ||
| Va. | Md. | N.C. | Tenn. | |||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 5/2005 | 41 | 43 | 34 | 40 | |
| Prior qtr. | 42 | 49 | 41 | 41 | ||
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 5/2005 | 43 | 36 | 42 | 38 | |
| Prior qtr. | 36 | 44 | 47 | 40 | ||
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 5/2005 | 37 | 42 | 41 | 36 | |
| Prior qtr. | 41 | 44 | 48 | 31 | ||
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 5/2005 | 51 | 49 | 49 | 56 | |
| Prior qtr. | 52 | 57 | 58 | 56 | ||
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 5/2005 | 43 | 45 | 39 | 43 | |
| Prior qtr. | 43 | 40 | 40 | 36 | ||
| % All credit needs not satisfied | 5/2005 | 6 | 5 | 7 | 5 | |
| Prior qtr. | 5 | 5 | 6 | 5 | ||
| % No credit needs | 5/2005 | 45 | 40 | 48 | 47 | |
| Prior qtr. | 49 | 51 | 51 | 56 | ||
| Va. | Md. | N.C. | Tenn. | |||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 5/2005 | 50 | 47 | 51 | 52 | |
| Prior qtr. | 42 | 48 | 54 | 49 | ||
| Selling prices (last three months) | ||||||
| Net % increased | 5/2005 | 16 | 21 | 15 | 17 | |
| Prior qtr. | 14 | 21 | 17 | 17 | ||
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 5/2005 | 11 | 11 | 11 | 11 | |
| Prior qtr. | 13 | 15 | 17 | 10 | ||
| Single most important business problem | ||||||
| % Weak sales | 5/2005 | 12 | 11 | 10 | 10 | |
| Prior qtr. | 7 | 7 | 11 | 9 | ||
| % Taxes | 5/2005 | 11 | 9 | 10 | 11 | |
| Prior qtr. | 10 | 10 | 9 | 12 | ||
| % Employee quality/costs | 5/2005 | 9 | 11 | 8 | 9 | |
| Prior qtr. | 11 | 7 | 11 | 12 | ||
| % Insurance | 5/2005 | 12 | 13 | 17 | 15 | |
| Prior qtr. | 15 | 15 | 15 | 14 | ||
| % Big-business competition | 5/2005 | 18 | 14 | 14 | 15 | |
| Prior qtr. | 16 | 14 | 15 | 15 | ||
| % Inflation/Rising prices | 5/2005 | 14 | 11 | 16 | 14 | |
| Prior qtr. | 8 | 14 | 16 | 12 | ||
| % Credit availability/Interest rates | 5/2005 | 3 | 4 | 2 | 4 | |
| Prior qtr. | 6 | 4 | 4 | 4 | ||
| % Regulations/Red tape | 5/2005 | 6 | 11 | 5 | 8 | |
| Prior qtr. | 9 | 13 | 5 | 6 | ||
| Virginia Quarterly Spotlight | |
| What is the single most important action you have taken in response to the rising cost of energy? | |
| Raised selling prices | 10% |
| Invested in energy-conserving equipment or vehicles | 7% |
| Reduced energy use | 19% |
| Absorbed higher costs with lower earnings | 11% |
| Reduced non-energy costs such as payroll | 4% |
| Increased promotion and/or advertising | 10% |
| Other | 2% |
| Nothing | 9% |
| Don't know/Refused | 28% |
| Total | 100% |
| What type of tax increase would have the most adverse effect on your business? | |
| Payroll taxes | 24% |
| Corporate incomes or franchise taxes | 10% |
| Real property taxes | 9% |
| Sales taxes | 11% |
| Personal income taxes | 12% |
| Personal property, including inventory | 15% |
| Other | 3% |
| All/Any | 1% |
| Don't know/Refused | 15% |
| Total | 100% |
The Poll
NFIB’s Virginia Small-Business ConditionsSM is a telephone survey of a random sample of Virginia 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.
