Small businesses planning to expand

More construction and contracting businesses as well as small retailers and transportation companies reported during the third quarter of 2007 that they are considering expansion plans for the next 12 to 24 months, according to the latest Small Business Research Board (SBRB) study.

Fewer owners of manufacturing firms, distribution and wholesaling companies, food and beverage operations and automotive and other vehicles dealers indicated that they intend to expand their businesses the next 12 to 24 months as reported during the third quarter.

More than 800 small businesses participated in the overall nationwide third quarter SBRB poll co-sponsored by International Profit Associates (IPA). IPA is a privately-held provider of management consulting services to small and medium-size businesses based in Buffalo Grove, IL.

The SBRB Small Business Confidence Index (SBCI) for all U.S. small businesses dropped three points from the prior period. The opinions and projections about the strength of the economy, revenues and hiring looking forward 12 months are the three key ingredients to determining the SBCI and providing the basis for these quarterly and annual comparisons. The historical SBRB SBCI high occurred during the first quarter of 2005 when the SBCI hit 52 points. The historical low was during the third quarter of 2005 when the SBCI fell to 39.3 points.

The following indicates the thoughts by industry about future expansion as well as intentions for improving productivity.

CONSTRUCTION & CONTRACTING: A growing number of owners and managers of small construction and contracting businesses indicated during the third quarter of 2007 that they are planning for expansion during the next 12 to 24 months.

Of the owners and managers responding to the nationwide quarterly SBRB poll, 36% said they plan to expand their businesses the next 12 to 24 months. This was an increase of 5 points from the 31% who said during the second quarter that were planning to expand their businesses.

Expansion at current locations and the addition of new locations were noted by 53% of the respondents intending to expand as their primary methods for growing their businesses. Expansion at current locations was mentioned by 30% of the participants while 23% (an increase of 13 points from the prior quarter) said they intend to add locations.


Enhancing customer services capabilities was third among the methods indicated for future expansion.

Training is viewed as a primary measure for improving productivity. Improved staff training ranked first among the options for enhancing business efficiency during the third quarter. These same owners also said they would add staff (second) before improving automated systems (third) just as they had similarly indicated during the second quarter. However, employee incentive programs was the fourth choice for increasing efficiency during the third quarter followed by investments in new automation and technology (fifth).

The SBRB Construction & Contracting Industry Small Business Confidence Index (SBCI) was 47 during the third quarter after having posted an SBRB SBCI of 48 the previous quarter. The second quarter 2007 SBCI of 48 was slightly more than one point shy of the indicator’s historical high of 49.3 recorded during the second quarter of 2006, the first time the SBRB issued such an industry indicator.

RETAIL: The percentage of owners and managers of small retail businesses considering expanding their operations during the next 12 to 24 months increased slightly during the third quarter of 2007.

Of the owners and managers responding to the nationwide quarterly SBRB poll, 32% said they plan to expand their businesses the next 12 to 24 months. This was an increase of 1 point from the 31% who said during the second quarter that were planning to expand their businesses.

Expansion at current locations and the addition of new locations were noted by 37% of the respondents intending to expand as their primary methods for growing their businesses. The poll indicated that 22% of those small businesses considering expansion will add locations while 17% said they will expand at existing locations.

The addition of new products was listed by 18% of those planning for future expansion while 16% said they would add new services and 14% said they would enhance their customer service capabilities.

The addition of staff and staff training are viewed as the primary measures for improving productivity. Adding staff ranked first among the options for enhancing business efficiency during the third quarter while training was second. These same owners also said they would add investments in new automation or technology (third), enhance existing automation or technology (fourth) and enhance employee incentive programs (fifth) as additional methods for improving their operating efficiencies.


The SBRB previously reported that its Retail Industry Small Business Confidence Index (SBCI) was 44.66 during the third quarter. It was the first time the SBRB issued an SBCI for the retail industry.

TRANSPORTATION: A growing number of owners and managers of small transportation businesses indicated during the third quarter of 2007 that they are planning for expansion during the next 12 to 24 months.

Of the owners and managers responding to the nationwide quarterly SBRB poll, 39% said they plan to expand their businesses the next 12 to 24 months. This was an increase of 6 points from the 33% who said during the second quarter that were planning to expand their businesses.

The addition of new locations was cited by 24% of the respondents as their prime method for achieving growth in the coming months. Expansion at current locations and enhancement of customer service were each cited by 19% of the participants to tie for the ranking as the second most prominent means for future growth. The providing of more services and growth by acquisition tied for fifth during the third quarter.

Where productivity is concerned, the owners and managers of the small transportation companies said they would be most likely to add staff and improve employee incentive programs before implementing other programs to boost efficiencies according to the SBRB Transportation Industry Report.

Staff training and enhancements to existing automation or technology tied for third on the list of prospective productivity improvement measures. The addition of new automation or technology finished fifth in the third quarter rankings.

MANUFACTURING: Fewer owners and managers of small manufacturing businesses indicated during the third quarter of 2007 that they are planning for expansion during the next 12 to 24 months.

Of the owners and managers responding to the nationwide quarterly SBRB poll, 25% said they plan to expand their businesses the next 12 to 24 months. This was a decrease of 4 points from the 29% who said during the second quarter that they were planning to expand their businesses.

Prospective facilities based activities -- expansion at current locations and the addition of new locations -- were noted by 39% of the respondents intending to expand as their primary methods for growing their businesses. Expansion at current locations was mentioned by 21% of the participants while 18% said they intend to add locations.


Enhancing customer services capabilities had 20% of the vote.

The addition of new products was cited by 18% as being their leading method for assisting in the expansion of small business during the third quarter while providing more services was cited by 11% of the small manufacturing companies.

As far as productivity, the addition of more automation or technology is regarded as the leading means for improving operating efficiency the next 12 to 24 months. This was followed by improved staff training and the addition of more staff as a means for enhancing productivity. Improvements to existing automation was fourth.

As previously reported, the SBRB Manufacturing Industry Small Business Confidence Index (SBCI) was 38.33 during the third quarter after having posted an SBRB SBCI of 40.3 the previous quarter.

DISTRIBUTION & WHOLESALING: Fewer owners and managers of small distribution and wholesaling businesses indicated during the third quarter of 2007 that they are planning for expansion during the next 12 to 24 months.

Of the owners and managers responding to the nationwide quarterly SBRB poll, 26% said they plan to expand their businesses the next 12 to 24 months. This was a decrease of 5 points from the 31% who said during the second quarter that they were planning to expand their businesses.

Prospective facilities based activities -- expansion at current locations and the addition of new locations -- were noted by 40% of the respondents intending to expand as their primary methods for growing their businesses. The addition of new locations was mentioned by 21% while 19% said they intend to expand at current locations.

The addition of new products also was mentioned by 21% of the respondents as a principle means for achieving growth.

The provision of additional services and the enhancement of customer service were both mentioned by 16% of the respondents as their leading methods for assisting in the expansion of their business during the third quarter.

Training is viewed as a primary measure for improving productivity. Improved staff training ranked first among the options for enhancing business efficiency during the third quarter. These same owners also said they would add staff (second) before improving automated systems (third). Improvements to existing automation or technology and enhanced employee incentive programs tied for fourth.


The SBRB previously reported that its Distribution & Wholesaling Small Business Confidence Index (SBCI) was 41 during the third quarter. It was the first time the SBRB issued an SBCI for the distribution and wholesaling industries.

FOOD & BEVERAGE: Fewer owners and managers of small food and beverage businesses indicated during the third quarter of 2007 that they are planning for expansion during the next 12 to 24 months.

Of the owners and managers responding to the nationwide quarterly SBRB poll, 27% said they plan to expand their businesses the next 12 to 24 months. This was a decrease of 2 points from the 29% who said during the second quarter that they were planning to expand their businesses.

Prospective facilities based activities -- expansion at current locations and the addition of new locations -- were noted by 41% of the respondents intending to expand as their primary methods for growing their businesses. Expansion at current locations was mentioned by 22% of the participants while 19% said they intend to add locations.

The addition of new products also was mentioned by 19% of the respondents as a principle means for achieving growth.

The provision of additional services and the enhancement of customer service were both mentioned by 14% of the respondents as their leading methods for assisting in the expansion of their business during the third quarter.

Training is viewed as a primary measure for improving productivity. Improved staff training ranked first among the options for enhancing business efficiency during the third quarter. These same owners also said they would add staff (second) before improving automated systems (third). Improvements to existing automation or technology and enhanced employee incentive programs were fourth and fifth.

The SBRB previously reported that its Food & Beverage Industry Small Business Confidence Index (SBCI) increased more than eight points to 48.5 during the third quarter.

AUTOMOTIVE & VEHICLE DEALER: Fewer owners and managers of small automotive and other vehicle dealerships indicated during the third quarter of 2007 that they are planning for expansion during the next 12 to 24 months.


Of the owners and managers responding to the nationwide quarterly SBRB poll, 24% said they plan to expand their businesses the next 12 to 24 months. This was a decrease of 5 points from the 29% who said during the second quarter that they were planning to expand their businesses.

Prospective facilities based activities -- expansion at current locations and the addition of new locations -- were noted by 40% of the respondents intending to expand as their primary methods for growing their businesses. The addition of new locations topped the rankings with 24% of the vote while expansion at current locations was mentioned by 16% of the participants.

Enhancing customer services capabilities had 19% of the vote.

The providing more services was cited by 16% of the companies and the addition of new products was cited by 14% during the third quarter as being their leading method for assisting in their business expansion in the coming months.

Where productivity is concerned, the owners and managers of the small transportation companies said they would be most likely to add staff and improve employee training programs before embarking on other programs to boost efficiencies according to the SBRB Automotive & Vehicle Dealer Industry Report. Enhancements to existing automation or technology or the addition of new automation or technology finished third and fourth respectively on the list of prospective productivity improvement measures. The enhancement of employee incentive programs finished fifth in the third quarter rankings.

The SBRB study is a voluntary survey conducted quarterly. The universe of participants is developed from among small businesses across the United States.

The latest information about the Small Business Research Board can be found at www.ipasbrb.com.

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