Release Date: 12/ 01/ 2005
CONTACT: Gordon Dixon, (804) 377-3661 or Jim Brown, (615) 874-5288
Total Cost of Materials, Insurance and Energy Increasing Most Rapidly
RICHMOND, Va. -- Virginia small-business owners report that sales and profits are among the best in the nation, but they're keeping a close eye on inflation and rising prices, 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 53 percent (positive percent minus negative percent) of respondents this quarter said sales are "good," slightly below a net 56 percent last quarter but No. 2 among 26 states in the survey group. A net 33 percent said profits are "good," down from a net 40 percent last quarter but No. 4 among 26 states in the survey group and trailing only Maryland (net 39 percent) in a peer group that includes North Carolina and Tennessee. Virginia's sales and profits rankings were No. 1 among these Southeast counterparts – Florida, Georgia, North Carolina, South Carolina and Tennessee.
Virginia small-business owners are increasingly wary of inflation and rising prices, citing it as their No. 1 business problem today. Fifteen percent said these pressures are now greater than big-business competition (14 percent), insurance (12 percent), taxes (12 percent) and employee quality or costs (11 percent). Small-business owners said the following total costs are rising most rapidly – materials (25 percent), insurance (24 percent), energy (22 percent) and labor (14 percent). Asked which cost pressure – wages or benefits – is greater on their business, 57 percent said wages, 25 percent said benefits and 5 percent said they were the same.
"Small-business owners in Virginia are faring well overall in today's economy, but they're not as optimistic in this post-Katrina environment," said NFIB/Virginia State Director Gordon Dixon, noting the negative effect this year's hurricanes have had on many small businesses. "The challenges caused by inflation and rising prices certainly have more of their attention, and unless these inflationary pressures subside they will likely continue to peck away at today's strong conditions."
A net 53 percent said business conditions remain "good," among the nation's best readings but down from last quarter's net 62 percent. Business outlook also is "good," according to a net 61 percent of respondents, below a net 73 percent reported in September. The net 61 percent trailed Maryland (net 66 percent) and Tennessee (net 62 percent), but edged North Carolina (net 60 percent), which lagged behind Virginia in most categories.
A net 18 percent said business conditions are "improving," down from last quarter's net 27 percent and an indication that momentum in the economy may have shifted.
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 | 11/2005 | 32 | 25 | 32 | 31 | |
| Prior qtr. | 41 | 21 | 38 | 32 | ||
| Business conditions in market area | ||||||
| Net % "good" | 11/2005 | 53 | 42 | 38 | 43 | |
| Prior qtr. | 62 | 53 | 43 | 40 | ||
| Net % "improving" | 11/2005 | 18 | 37 | 10 | 9 | |
| Prior qtr. | 27 | 16 | 14 | 6 | ||
| Outlook for business | ||||||
| Net % "good" in next three months | 11/2005 | 61 | 66 | 60 | 62 | |
| Prior qtr. | 73 | 65 | 65 | 62 | ||
| Reason for optimism | ||||||
| % Sales prospects | 11/2005 | 56 | 57 | 45 | 51 | |
| Prior qtr. | 49 | 43 | 43 | 37 | ||
| % Lower costs | 11/2005 | 4 | 4 | 3 | 5 | |
| Prior qtr. | 2 | 5 | 2 | 3 | ||
| % Price increases | 11/2005 | 3 | 3 | 3 | 5 | |
| Prior qtr. | 2 | 5 | 4 | 4 | ||
| % Greater productivity | 11/2005 | 14 | 13 | 15 | 16 | |
| Prior qtr. | 9 | 14 | 18 | 16 | ||
| % Government policy | 11/2005 | 4 | 2 | 6 | 5 | |
| Prior qtr. | 5 | 5 | 4 | 4 | ||
| % Seasonal/Weather | 11/2005 | 9 | 5 | 12 | 5 | |
| Prior qtr. | 10 | 8 | 9 | 10 | ||
| 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 | ||
| Va. | Md. | N.C. | Tenn. | |||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 11/2005 | 53 | 52 | 40 | 47 | |
| Prior qtr. | 56 | 49 | 53 | 41 | ||
| Profits | ||||||
| Net % profits "good" | 11/2005 | 33 | 39 | 24 | 32 | |
| Prior qtr. | 37 | 33 | 38 | 27 | ||
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 11/2005 | 22 | 25 | 17 | 17 | |
| Prior qtr. | 26 | 22 | 15 | 20 | ||
| Per employee payroll cost | ||||||
| Net % "risen" | 11/2005 | 10 | 17 | 14 | 15 | |
| Prior qtr. | 17 | 17 | 16 | 15 | ||
| Employee cost pressures (greater) | ||||||
| % Wages | 11/2005 | 57 | 56 | 57 | 57 | |
| Prior qtr. | 58 | 53 | 54 | 59 | ||
| % Benefits | 11/2005 | 26 | 29 | 28 | 24 | |
| Prior qtr. | 27 | 27 | 28 | 24 | ||
| Va. | Md. | N.C. | Tenn. | |||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 11/2005 | 45 | 46 | 41 | 43 | |
| Prior qtr. | 43 | 45 | 44 | 41 | ||
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 41 | 47 | 43 | 47 | |
| Prior qtr. | 41 | 40 | 43 | 39 | ||
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 42 | 46 | 44 | 42 | |
| Prior qtr. | 39 | 42 | 42 | 39 | ||
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 11/2005 | 51 | 60 | 54 | 58 | |
| Prior qtr. | 47 | 51 | 52 | 49 | ||
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 11/2005 | 42 | 42 | 38 | 37 | |
| Prior qtr. | 37 | 37 | 39 | 35 | ||
| % All credit needs not satisfied | 11/2005 | 8 | 5 | 8 | 8 | |
| Prior qtr. | 7 | 6 | 5 | 6 | ||
| % No credit needs | 11/2005 | 46 | 47 | 51 | 52 | |
| Prior qtr. | 50 | 49 | 52 | 53 | ||
| Va. | Md. | N.C. | Tenn. | |||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 11/2005 | 58 | 55 | 64 | 64 | |
| Prior qtr. | 56 | 49 | 54 | 58 | ||
| Selling prices (last three months) | ||||||
| Net % increased | 11/2005 | 22 | 25 | 18 | 21 | |
| Prior qtr. | 18 | 18 | 14 | 13 | ||
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 11/2005 | 7 | 12 | 12 | 10 | |
| Prior qtr. | 13 | 12 | 9 | 10 | ||
| Single most important business problem | ||||||
| % Weak sales | 11/2005 | 10 | 7 | 8 | 9 | |
| Prior qtr. | 8 | 7 | 9 | 8 | ||
| % Taxes | 11/2005 | 12 | 10 | 9 | 14 | |
| Prior qtr. | 11 | 9 | 13 | 13 | ||
| % Employee quality/costs | 11/2005 | 11 | 15 | 11 | 8 | |
| Prior qtr. | 13 | 12 | 10 | 10 | ||
| % Insurance | 11/2005 | 12 | 16 | 14 | 9 | |
| Prior qtr. | 12 | 16 | 17 | 19 | ||
| % Big-business competition | 11/2005 | 14 | 14 | 16 | 13 | |
| Prior qtr. | 17 | 14 | 14 | 11 | ||
| % Inflation/Rising prices | 11/2005 | 16 | 13 | 17 | 22 | |
| Prior qtr. | 15 | 11 | 12 | 13 | ||
| % Credit availability/Interest rates | 11/2005 | 3 | 4 | 3 | 4 | |
| Prior qtr. | 3 | 4 | 3 | 2 | ||
| % Regulations/Red tape | 11/2005 | 7 | 7 | 7 | 7 | |
| Prior qtr. | 6 | 6 | 8 | 8 | ||
| Virginia Quarterly Spotlight | |
| Which of your total costs are rising most rapidly? | |
| Energy | 22% |
| Labor | 14% |
| Insurance | 24% |
| Materials | 25% |
| Some other | 3% |
| None rising rapidly | 3% |
| Don't know/Refused | 9% |
| Total | 100% |
| Which of your costs are rising next most rapidly? | |
| Energy | 23% |
| Labor | 19% |
| Insurance | 16% |
| Materials | 25% |
| Some other | 6% |
| None rising rapidly | 6% |
| Don't know/Refused | 5% |
| 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.
