Visa Outlines Opportunities for Small Business Growth

Macroeconomic data compiled and analyzed by Visa USA provides a mixed outlook. Although gross domestic product (GDP) was robust in 2006, Best expects to see lower consumer spending growth, or personal consumption expenditures (PCE), in the coming year. PCE growth is forecast to grow at 4.9 percent in 2007, down from 6 percent in 2006.

“The trend of lower PCE growth is driven by weaknesses in the housing market, which is pushing down mortgage equity withdrawals,” said Best. “While the economy may slow, the common denominator with the past will still be the resilience of consumer spending. Consumers will continue to take the lead in driving economic growth, with consumer spending representing 70 percent of our economy.”

Despite the divergent economic indicators, Best said small businesses remain bullish on the future, and he attributed continued optimism to relatively low interest rates and a stronger job market1. Meanwhile, taxes and the cost/availability of insurance are the two most pressing concerns for small businesses, followed by the tight labor market, he said.

As a hedge against current economic uncertainty, Best identified five tips for small business owners:

• Improve cash flow management – Managing cash flow is the most important challenge facing small businesses. This is particularly relevant in an economic environment where customers are sensitive to price increases and are seeking to delay payments. “Business owners should look at payment solutions, such as payment cards, that allow them to time cash outlays and reduce the headaches associated with managing account receivables,” Best said.
• Adapt to tighter labor market – Small business owners should conduct employee searches through new channels and implement innovative approaches to retaining valuable employees. Today’s technology allows small businesses to harness the Internet to recruit new employees and clearly delineate the advantages of working at their small business on a real time basis.
• Make smart investments – This is a good time to make smart investments in business expansion or upgrade infrastructure, such as technology. Investments that have a quick return can be achieved under the current moderate interest rate environment. These returns can include productivity improvements that are attributable to investments in selective software and hardware.
• Don’t lock into long-term leases - Given the uncertain impact of housing trends, small business may have an opportunity to negotiate more favorable leases.
• Financial flexibility will lead to business stability – Small businesses need to adapt to the changes in the economy by choosing financial products that are best suited to their business needs.

“At Visa, we are proud of our ability to provide small businesses with the financial flexibility they need through leading-edge payment products,” said Raghav Lal, senior vice president, Small Business Products, Visa USA. “We remain committed to working with our member financial institutions to deliver solutions that can be customized to the specific needs of small businesses, such as multiple payment products with intuitive and powerful reporting; business specific rewards and merchant offers; unsurpassed acceptance; and robust security.”

“Small business owners are at the forefront of the U.S. business landscape and therefore are excellent barometers of our economic health,” Best said. “While economic indicators point to a slowdown in the economy, small business owners, who are the engine of our economy and are natural innovators and optimists, clearly see the glass as half full, rather than half empty.”