Jeff Stibel's Blog
April 3, 2017
Federal Interest Rate Hikes Cloud Generally Optimistic Economic Outlook by Nation’s Small and Mid-Sized Businesses
LOS ANGELES, April 03, 2017 /Business Wire/ — Despite a generally optimistic economic outlook, businesses reported that the recent increase in the federal interest rate is affecting profitability and restricting hiring, according to new results from the first quarter 2017 Private Capital Access (PCA) Index report from Dun & Bradstreet and Pepperdine Graziadio School of Business and Management. The report can be found here.
Mid-sized businesses (between $5-100 million revenue) reported both a decline in profitability and an inability to hire new employees due to the higher interest rate environment. Profitability was down six points for the first quarter at 68 percent compared to 74 percent from the previous quarter. Twenty-seven percent of these businesses, up from 20 percent in the previous quarter, cited the current financing environment has restricted their ability to hire new employees.
Fewer mid-sized businesses reported that “they were able to qualify” for credit in Q1 2017 (55 percent) than in Q4 2016 (62 percent). In December 2016, the Federal Reserve raised interest rates by 0.25 percent—the second increase of the decade. On March 15, 2017 the Federal Reserve initiated another short-term rate hike of 0.25 percent, and signaled two more increases this year amid strong job growth and rising inflation. Such interest rate hikes can impact the ability of businesses to borrow capital to maintain facilities, hire employees, and expand operations. The impact of the March interest rate hike will be measured in the Q2 report.
“The Federal Reserve’s assessment of improving economic conditions is consistent with many of the PCA’s findings from the past year, but we are also seeing nervousness on the part of business owners due in part to rising interest rates,” said Craig R. Everett, PhD, director, Pepperdine Private Capital Markets Project. “While low interest rates in recent years have helped businesses stabilize, this quarter’s results suggest that the current rate hikes may negatively impact cash flow and therefore soften their ability to hire throughout 2017.”
Some Relief for Small Businesses
According to survey results, the decrease in profitability and hiring associated with the December interest rate hike among mid-sized businesses contrasts with the general economic progress experienced by small businesses (annual revenues under $5 million).
Fewer small businesses operated at a loss in Q1 2017 compared to a year ago. Fifty-three percent of those businesses reported that they were profitable, compared to 50 percent in Q1 2016, while 22 percent reported a loss, compared to 26 percent in Q1 2016.
However, in Q1 2017, more small businesses reported “working capital fluctuations” as their primary reason for seeking financing in the next six months (22 percent), compared to Q1 2016 (19 percent). Fewer reported seeking financing for growth and expansion (56 percent) than in Q1 2016 (63 percent).
“Optimism continues to rise for small businesses, and that has been fueled by increasing revenues and profitability in an expanding economy,” said Jeff Stibel, vice chairman of Dun & Bradstreet. “But we can expect stability to be the biggest component of optimism for businesses of all sizes in the next year.”
The PCA Index is a quarterly indicator produced by the Graziadio School of Business and Management at Pepperdine Universitywith the support of Dun & Bradstreet. The Q1 2017 Index report was derived from 1,317 completed responses collected from February 3 – February 17, 2017.
Download the latest index data here and follow us on Twitter at @GraziadioSchool, @DnBb2b, @DnBUS and @AccesstoCapital.
About Dun & Bradstreet
Dun & Bradstreet (DNB) grows the most valuable relationships in business. By uncovering truth and meaning from data, we connect customers with the prospects, suppliers, clients and partners that matter most, and have since 1841. Nearly ninety percent of the Fortune 500, and companies of every size around the world, rely on our data, insights and analytics. For more about Dun & Bradstreet, visit DNB.com. Twitter:@DnBUS.
About Pepperdine Graziadio School of Business and Management
A leader in cultivating entrepreneurship and digital innovation, the Pepperdine Graziadio School of Business and Management focuses on the real-world application of MBA-level business concepts. The Graziadio School provides student-focused, globally-oriented education through part-time, full-time, and executive MBA programs at our five Southern California locations, Silicon Valley and Santa Barbara campuses, as well as through online and hybrid formats. In addition, the Graziadio School offers a variety of master of science programs, a bachelor of science in management degree-completion program, and the Presidents and Key Executives MBA, as well as executive education certificate programs. Follow the Graziadio School on Facebook, Twitter at @GraziadioSchool, and LinkedIn.
Contacts
Pepperdine Graziadio School of Business and Management
Lisa Perry, 310-568-2314
lisa.perry@pepperdine.edu
or
Dun & Bradstreet
Lauren Simpson, 310-919-2230
simpsonl@dnb.com
The post Federal Interest Rate Hikes Cloud Generally Optimistic Economic Outlook by Nation’s Small and Mid-Sized Businesses appeared first on Dun & Bradstreet.
Federal Interest Rate Hikes Cloud Generally Optimistic Economic Outlook by Nation’s Small and Mid-Sized Businesses
LOS ANGELES, April 03, 2017 /BusinessWire/ — Despite a generally optimistic economic outlook, businesses reported that the recent increase in the federal interest rate is affecting profitability and restricting hiring, according to new results from the first quarter 2017 Private Capital Access (PCA) Index report from Dun & Bradstreet and Pepperdine Graziadio School of Business and Management. The report can be found here.
Mid-sized businesses (between $5-100 million revenue) reported both a decline in profitability and an inability to hire new employees due to the higher interest rate environment. Profitability was down six points for the first quarter at 68 percent compared to 74 percent from the previous quarter. Twenty-seven percent of these businesses, up from 20 percent in the previous quarter, cited the current financing environment has restricted their ability to hire new employees.
Fewer mid-sized businesses reported that “they were able to qualify” for credit in Q1 2017 (55 percent) than in Q4 2016 (62 percent). In December 2016, the Federal Reserve raised interest rates by 0.25 percent—the second increase of the decade. On March 15, 2017 the Federal Reserve initiated another short-term rate hike of 0.25 percent, and signaled two more increases this year amid strong job growth and rising inflation. Such interest rate hikes can impact the ability of businesses to borrow capital to maintain facilities, hire employees, and expand operations. The impact of the March interest rate hike will be measured in the Q2 report.
“The Federal Reserve’s assessment of improving economic conditions is consistent with many of the PCA’s findings from the past year, but we are also seeing nervousness on the part of business owners due in part to rising interest rates,” said Craig R. Everett, PhD, director, Pepperdine Private Capital Markets Project. “While low interest rates in recent years have helped businesses stabilize, this quarter’s results suggest that the current rate hikes may negatively impact cash flow and therefore soften their ability to hire throughout 2017.”
Some Relief for Small Businesses
According to survey results, the decrease in profitability and hiring associated with the December interest rate hike among mid-sized businesses contrasts with the general economic progress experienced by small businesses (annual revenues under $5 million).
Fewer small businesses operated at a loss in Q1 2017 compared to a year ago. Fifty-three percent of those businesses reported that they were profitable, compared to 50 percent in Q1 2016, while 22 percent reported a loss, compared to 26 percent in Q1 2016.
However, in Q1 2017, more small businesses reported “working capital fluctuations” as their primary reason for seeking financing in the next six months (22 percent), compared to Q1 2016 (19 percent). Fewer reported seeking financing for growth and expansion (56 percent) than in Q1 2016 (63 percent).
“Optimism continues to rise for small businesses, and that has been fueled by increasing revenues and profitability in an expanding economy,” said Jeff Stibel, vice chairman of Dun & Bradstreet. “But we can expect stability to be the biggest component of optimism for businesses of all sizes in the next year.”
The PCA Index is a quarterly indicator produced by the Graziadio School of Business and Management at Pepperdine Universitywith the support of Dun & Bradstreet. The Q1 2017 Index report was derived from 1,317 completed responses collected from February 3 – February 17, 2017.
Download the latest index data here and follow us on Twitter at @GraziadioSchool, @DnBb2b, @DnBUS and @AccesstoCapital.
About Dun & Bradstreet
Dun & Bradstreet (DNB) grows the most valuable relationships in business. By uncovering truth and meaning from data, we connect customers with the prospects, suppliers, clients and partners that matter most, and have since 1841. Nearly ninety percent of the Fortune 500, and companies of every size around the world, rely on our data, insights and analytics. For more about Dun & Bradstreet, visit DNB.com. Twitter:@DnBUS.
About Pepperdine Graziadio School of Business and Management
A leader in cultivating entrepreneurship and digital innovation, the Pepperdine Graziadio School of Business and Management focuses on the real-world application of MBA-level business concepts. The Graziadio School provides student-focused, globally-oriented education through part-time, full-time, and executive MBA programs at our five Southern California locations, Silicon Valley and Santa Barbara campuses, as well as through online and hybrid formats. In addition, the Graziadio School offers a variety of master of science programs, a bachelor of science in management degree-completion program, and the Presidents and Key Executives MBA, as well as executive education certificate programs. Follow the Graziadio School on Facebook, Twitter at @GraziadioSchool, and LinkedIn.
Contacts
Pepperdine Graziadio School of Business and Management
Lisa Perry, 310-568-2314
lisa.perry@pepperdine.edu
or
Dun & Bradstreet
Lauren Simpson, 310-919-2230
simpsonl@dnb.com
The post Federal Interest Rate Hikes Cloud Generally Optimistic Economic Outlook by Nation’s Small and Mid-Sized Businesses appeared first on Dun & Bradstreet.
March 17, 2017
Helping Hands
The post Helping Hands appeared first on Dun & Bradstreet.
December 19, 2016
December 14, 2016
Small Business Demand for Capital Has Hit A Four-Year High Despite Cautious Optimism for 2017
LOS ANGELES, December 14, 2016 /PRNewswire/ — Women-Owned Businesses Are Feeling More Restricted by Economic Environment
Demand for capital hit a four-year high for small businesses (<$5M in revenue) according to the fourth quarter results of the Private Capital Access (PCA) Index report by Dun & Bradstreet and Pepperdine Graziadio School of Business and Management. Demand for capital jumped four percent from last quarter and 13 percent from a year ago (Q4 2015). However, access to capital for small businesses has not kept pace with the growth of demand: year-over-year access is up nearly seven percent, while down by less than one percent since last quarter.
At the same time, bank loan success rates reached an all time low for small businesses and the success rate between small and mid-sized businesses (between $5 – 10M in revenue) reached its largest gap since the study began in 2012. The Q4 results show that 29 percent of small businesses successfully secured a bank loan, compared to 87 percent of mid-sized businesses. The peak success rate for bank loans was 43 percent of small businesses compared to 76 percent of mid-sized businesses in Q4 2014. The low success rates for small businesses may reflect bank skittishness over businesses with fewer collateral assets. This could account for why a large percent of small businesses were seeking loans from friends and family (46 percent) and crowdfunding (23 percent) in the last quarter.
Both small (24 percent, up from 20 percent one year ago) and mid-sized businesses (37 percent, up from 28 percent one year ago) reported economic uncertainty as the lead reason preventing hiring. Businesses also reported that a Federal interest rate hike could negatively impact their operations, with 31 percent (up from 29 percent in 2015) of mid-sized businesses reporting a Federal interest rate hike could restrict their ability to secure contracts and expand to new markets.
Despite the reported lack of economic confidence, more small and mid-sized businesses are planning to seek financing than a year ago. Thirty-five percent of small businesses and 27 percent of mid-sized businesses are planning to raise capital in the next six months. Sixty-five percent of small businesses cited growth or expansion (up from 60 percent in 2015) as the reason for seeking capital, versus 56 percent of mid-sized businesses (up from 46 percent in 2015). Working capital fluctuations (62 percent small; 57 percent mid-sized) and increased demand (62 percent small; 46 percent mid-sized) rounded out the top three reasons for raising capital.
“This survey was conducted before the election. The economic uncertainty that comes with an election season is the driver behind small business’ lackluster expectations going into the new year,” said Dr. Craig R. Everett, director of the Pepperdine Private Capital Markets Project. “This quarter’s numbers, however, tell us that regardless of the unknown, small business owners plan to seek capital to fuel growth within the next few months, and that demand for capital has hit a peak since 2012. This may indicate growth in the small business sector in 2017.”
Women-Owned Businesses Report Restricted Growth
Compared to the whole sample, women-owned businesses report that the current business environment is restricting their ability to grow (69 percent vs. whole sample 57 percent) and hire new employees (62 percent vs. whole sample 49 percent). Women-owned businesses perceive that it is more difficult to raise capital and both equity financing (71 percent vs. 62 percent whole sample) and debt financing (76 percent vs. 61 percent whole sample). The Q4 results show that women-owned businesses are in fact even less successful at securing bank loans than other businesses, with a 26 percent success rate compared to 37 percent for all businesses.
“Women-owned businesses employ nearly eight million people in the U.S. and are a vital part of the national economy,” said Jeff Stibel, Vice Chairman of Dun & Bradstreet. “It will be critical for our economy to overcome the roadblocks that are preventing women-owned businesses from growing, including the continued challenge in securing access to capital.”
Women-owned businesses are seeking to raise capital in the next six months at a higher rate than the whole sample, with 40 percent reporting that they plan to raise capital, compared to 34 percent whole sample. The leading reasons for the needed capital reported by women-owned businesses include financing future growth or expansion (74 percent) and growth due to expected increase in demand (70 percent). Sixty-nine percent of women-owned businesses cite working capital fluctuations as a reason for demand in financing compared to 60 percent of whole business sample.
The PCA Index is a quarterly indicator produced by the Graziadio School of Business and Management at Pepperdine University with the support of Dun & Bradstreet. The Q4 2016 survey is based on 1,593 completed responses collected October 13 – October 31, 2016.
Download the latest index data here and follow us on Twitter at @GraziadioSchool, @DnBb2b, and @AccesstoCapital.
About Dun & Bradstreet
Dun & Bradstreet (NYSE: DNB) grows the most valuable relationships in business. By uncovering truth and meaning from data, we connect our customers with the prospects, suppliers, clients and partners that matter most, and have since 1841. Nearly ninety percent of the Fortune 500, and companies of every size around the world, rely on our data, insights and analytics. For more about Dun & Bradstreet, visit DNB.com. Twitter: @DnBUS
About the Pepperdine Graziadio School for Business and Management
A leader in cultivating entrepreneurship and digital innovation, the Pepperdine Graziadio School of Business and Management focuses on the real-world application of MBA-level business concepts. The Graziadio School provides student-focused, globally-oriented education through part-time, full-time, and executive MBA programs at our five Southern California locations and Silicon Valley and Santa Barbara campuses, as well as through online and hybrid formats. In addition, the Graziadio School offers a variety of master of science programs, a bachelor of science in management degree-completion program, and the Presidents and Key Executives MBA, as well as executive education certificate programs. Follow the Graziadio School on Facebook, Twitter at @GraziadioSchool, Instagram, and LinkedIn.
Contacts:
Pepperdine Graziadio School of Business and Management
Lisa Perry, (310) 568-2314
lisa.perry@pepperdine.edu
Dun & Bradstreet
Lauren Simpson, (310) 919-2230
simpsonl@dnb.com
The post Small Business Demand for Capital Has Hit A Four-Year High Despite Cautious Optimism for 2017 appeared first on Dun & Bradstreet.
November 30, 2016
October 3, 2016
SMEs Focus On Cash Management For Global Growth
The post SMEs Focus On Cash Management For Global Growth appeared first on Dun & Bradstreet.
September 29, 2016
September 28, 2016
More Businesses Seeking Credit To Protect Against Working Capital Crunch
LOS ANGELES, September 28, 2016 /BUSINESS WIRE/ — Although businesses have reported steady increases in access to credit since 2012 and an increase in demand for credit compared to the same time last year, small businesses are still scrambling to secure working capital, according to the third quarter 2016 Private Capital Access (PCA) Index report by Dun & Bradstreet and Pepperdine Graziadio School of Business and Management.
Study: Small businesses report “slow accounts receivable” impacting their financial condition
Both small (less than $5 million in revenue) and mid-sized ($5-$100 million in revenue) businesses combined reported a 7.8 percent increase in access to capital and a 3.1 percent increase in demand for capital year-over-year. However, about two percent more businesses than a year ago reported seeking financing for “working capital fluctuations” — defined as fluctuations in business funds that are used in day-to-day trading operations and generally considered to be a standard measure of a company’s efficiency and economic health.
“Small businesses are getting even more access to credit, and this correlates to continued expansion and revenue growth,” said Jeff Stibel, Vice Chairman of Dun & Bradstreet. “These small businesses are leaner than they were before the recession, and typically not able to rely on the same liquid assets as larger companies, making access to working capital critical to fuel continued growth.”
Business concerns about a stable financial future were evident in the 25.7 percent increase in businesses citing “worsening financial conditions” as a reason for seeking financing, compared to the year-ago period (35.2 percent in Q3 2016 versus 28 percent in Q3 2015).
Concerns about cash flow were also reflected in the increasing percentage of businesses noting that “slow accounts receivable” were impacting their financial condition. Twenty-seven percent of small and mid-sized businesses reported that slow accounts receivable led to additional borrowing to sustain cash flow. Among small businesses, 27 percent in Q3 2016 noted the need for additional borrowing compared to 25 percent in Q3 2015, an increase of 12 percent. Both small businesses (39 percent) and mid-sized businesses (15 percent) reported slow accounts receivable as a reason for slow or stopped growth in Q3 2016. In addition, among both small and mid-sized businesses, 8.3 percent anticipated revenue decreases in Q3 2016.
“As this research demonstrates, the health of the U.S. business community can be viewed through multiple lenses. Increased access to and demand for credit is a favorable metric when assessing near and long-term costs and opportunities, but notably, businesses are viewing the future with growing trepidation,” said Dr. Craig R. Everett, Director of the Pepperdine Private Capital Markets Project. “Our analysis suggests that businesses appear to be less concerned about short-term growth and profitability than on ensuring future liquidity.”
As companies brace for worsening financial conditions, the Q3 2016 data suggest that cash flow skittishness may be leading businesses toward alternative financing and lending options, including higher-risk solutions, to free up liquidity. Increasingly, businesses reported the use of factor lending, a type of debtor finance in which a business sells its accounts receivable to a third party (a “factor”) at a discount (29 percent sought factor lending in Q3 2016 versus 22 percent in Q3 2015, a 24.1 percent increase). A business will often factor its receivable assets to meet its present and immediate cash needs.
Similarly, fewer businesses are accessing trade credit, a financing option under which suppliers extend credit to businesses for the purpose of buying now and paying later. More than 17 percent fewer businesses reported access to trade credit in Q3 2016, compared to Q3 2015 (57 percent in Q3 2015 versus 47 percent in Q3 2016). Study authors hypothesized that the decrease could correlate with a decline in business activity, or that suppliers have tightened trade credit due to concerns about the operational stability of trade business partners.
The PCA Index is a quarterly indicator produced by the Graziadio School of Business and Management at Pepperdine University with the support of Dun & Bradstreet. The Q3 2016 survey is based on 1,888 completed responses collected July 6 – July 29, 2016.
Download the latest index data here and follow us on Twitter at @GraziadioSchool, @DnBb2b, and @AccesstoCapital.
About Dun & Bradstreet
Dun & Bradstreet (NYSE: DNB) grows the most valuable relationships in business. By uncovering truth and meaning from data, we connect our customers with the prospects, suppliers, clients and partners that matter most, and have since 1841. Nearly ninety percent of the Fortune 500, and companies of every size around the world, rely on our data, insights and analytics. For more about Dun & Bradstreet, visit DNB.com. Twitter: @DnBUS
About the Pepperdine Graziadio School for Business and Management
A leader in cultivating entrepreneurship and digital innovation, the Pepperdine Graziadio School of Business and Management focuses on the real-world application of MBA-level business concepts. The Graziadio School provides student-focused, globally oriented education through part-time, full-time, and executive MBA programs at our five Southern California locations and Silicon Valley and Santa Barbara campuses, as well as through online and hybrid formats. In addition, the Graziadio School offers a variety of master of science programs, a bachelor of science in management degree-completion program, and the Presidents and Key Executives MBA, as well as executive education certificate programs. Follow the Graziadio School on Facebook, Twitter at @GraziadioSchool, and LinkedIn.
Contacts
Pepperdine Graziadio School of Business and Management
Lisa Perry, 310-568-2314
lisa.perry@pepperdine.edu
or
Dun & Bradstreet
Lauren Simpson, 310-919-2230
simpsonl@dnb.com
The post More Businesses Seeking Credit To Protect Against Working Capital Crunch appeared first on Dun & Bradstreet.
