Business Owners Pessimistic About Economy, New PNC Survey Finds

Lawndale News Chicago's Bilingual Newspaper - BusinessOne out of two Chicago and suburban area women business owners expect their sales to increase in the next six months, but most have no plans to hire full-time employees as a “soft patch” continues to slow the U.S. economic recovery. The findings of the first-ever PNC Women Business Owners Outlook show women owners show a reluctance to take on long-term financing or make capital investments in the months ahead.

“Our women’s survey findings reinforce that the U.S. economy continues to suffer through this current soft patch, as growth has slowed into the realm of stalled speed,” said Stuart Hoffman, chief economist of the PNC Financial Services Group, Inc. “Even though we are dialing back our expectations for the second half of 2011, we do not expect the economy to slide into a double-dip recession.”

PNC found that most women owners are funding their businesses with credit cards and personal savings in lieu of long-term bank financing. Nearly six out of ten use a business credit card and almost half (44 percent) rely on personal or family savings to fund their businesses. “While women business owners often describe themselves as being debt-averse, those who rely strictly on savings and credit cards leave few options to weather downturns without cashing in personal assets or taking a hit to their personal credit history,” said Beth Marcello, director of Women’s Business Development at PNC, which has loaned nearly $7 billion to women-owned businesses since 2005.

According to PNC’s findings, women owners rely on an average of 2.7 sources of money to fund their businesses. Additional sources of capital include a line of credit from a financial institution (38 percent), personal credit card (28 percent) and a business loan from a financial institution (25 percent).

Survey Highlights: Mixed Views

The survey, which seeks to gauge the outlook, mindset and business philosophy of women business owners across Chicago and the suburbs, found owners are optimistic about their own companies, but wary about the economy over the next six months. Other findings include:

Business is Good: Women owners are pleased with the current financial performance of their business as 14 percent say their business is exceeding expectations and 40 percent say it is meeting expectations.

Sales and Profits: More than half (53 percent) expect sales to increase during the next six months. Four out of ten (40 percent) expect higher profits.

Stalled Hiring Outlook: However, three out of four (70 percent) have no plans to hire full-time employees.

Big Picture – Good News, Bad News: Over the next six months, the majority of women business owners are optimistic about their own businesses, but only 48 percent intend to make a capital investment. Their outlook for the larger economy is gloomy, as almost half (47 percent) are pessimistic about the prospects for the U.S. economy and 42 percent are pessimistic about their local economy. Over a recent ten year period, the number of women-owned businesses in the U.S. grew by 44 percent, twice as fast as men-owned firms. Over the same period, women-owned firms added 500,000 new jobs.

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