EO Economic Forecast Survey — Q3 2010 Results

Thanks for participating in our 2010 Q3 economic survey, which was conducted in September. Question-by-question results are below, but before you wade through those, let us take you through the highlights:

The availability of equity funding and credit top Nashville entrepreneurs’ concerns heading into the end of the year. Despite these concerns, a majority plan to increase spending on staffing, compensation and technology.

When compared to the same survey from the first quarter of 2010, 60% remain concerned or very concerned about the economic climate, that percentage is down from 82% six months ago.

Full results and observations below. If you have any questions or comments about the results, or want to weigh in with your insights, please leave a comment on the post. Drum roll please…

1. Please rate your level of concern about the effect of the U.S. financial climate on your business.

  • 39% Very concerned
  • 23% Concerned
  • 29% Neutral
  • 10% Unconcerned
  • 0% Very unconcerned

(Compared to our Q1 2010 survey, the ‘Very concerned’ group of responders rose 10%, from 29%)

2. Please rate your level of concern about securing funding for your business.

  • 10% Very concerned
  • 23% Concerned
  • 32% Neutral
  • 29% Unconcerned
  • 7% Very unconcerned

(‘Very concerned’ group down 15%, from 25%, from the Q1 survey)

3. Please rate your level of concern about the impact of rising health care costs on your business.

  • 32% Very concerned
  • 39% Concerned
  • 19% Neutral
  • 10% Unconcerned
  • 0% Very unconcerned

(‘Very concerned’ responders rose 11%, from 21%)

4. How do you believe your business will be affected by the new health reform act?

  • 19% Very negative effect
  • 42% Somewhat negative effect
  • 29% No effect
  • 7% Somewhat positive effect
  • 3% Very positive effect

(61% of responders believe that the health care reform act will have a negative effect, compared to 10% who believe that the reform will have a positive effect)

Further insights from those anticipating a negative effect (these are anonymous of course!): “hiring freeze until understand costs;” “the cost of an employee will increase, which reduces ROI;” “It will cause private health insurance premiums to rise, as has already happened.”

Further insights from those anticipating no effect, or a positive effect: “This will add what the insurance industry really, really needs: Competition;” “Based on what I have reviewed from health care experts, it shouldn’t have an effect on a business our size.”

5. What factors do you see being of the most concern to entrepreneurs starting a business today?

  • 42% Availability of equity funding
  • 61% Availability of credit
  • 16% Availability of customers
  • 29% Availability of skilled workers
  • 3% Availability of materials
  • 23% Rapidly changing materials
  • 32% Government regulations/interference

(Availability of credit is up from 39% in the first quarter, availability of funding is also up from 32%)

6. How do you expect your spending to change on staffing?

  • 7% Increase substantially
  • 52% Increase slightly
  • 32% Stay the same
  • 10% Decrease slightly
  • 0% Decrease substantially

(60% will increase on staffing, down from 75% at the beginning of the year)

7. How do you expect your spending to change on employee compensation?

  • 7% Increase substantially
  • 45% Increase slightly
  • 42% Stay the same
  • 3% Decrease slightly
  • 3% Decrease substantially

(Spending on compensation will increase for 54%, down from 63%)

8. How do you expect your spending to change on employee benefits?

  • 3% Increase substantially
  • 7% Increase slightly
  • 84% Stay the same
  • 7% Decrease slightly
  • 0% Decrease substantially

9. How do you expect your spending to change on business travel?

  • 3% Increase substantially
  • 32% Increase slightly
  • 58% Stay the same
  • 3% Decrease slightly
  • 3% Decrease substantially

10. How do you expect your spending to change on technology?

  • 16% Increase substantially
  • 42% Increase slightly
  • 36% Stay the same
  • 7% Decrease slightly
  • 0% Decrease substantially

(60% will increase spending, down from 68% during the first quarter)

11. How do you expect your spending to change on marketing/advertising/PR?

  • 13% Increase substantially
  • 42% Increase slightly
  • 45% Stay the same
  • 0% Decrease slightly
  • 0% Decrease substantially

(No respondent plans to decrease spending in these categories)

12. How do you expect your spending to change on outsourced business services?

  • 3% Increase substantially
  • 36% Increase slightly
  • 61% Stay the same
  • 0% Decrease slightly
  • 0% Decrease substantially

(No decreases in this category either)

13. How much of a priority will “green” initiatives be for your business between now and the end of the year?

  • 10% Much greater priority
  • 3% Somewhat greater priority
  • 48% About the same
  • 19% Somewhat less priority
  • 0% Much less priority
  • 19% We don’t participate in any green initiatives

14. How do you expect your revenues to change in 2010 vs. 2009?

  • 45% Increase substantially
  • 42% Increase slightly
  • 7% Stay the same
  • 7% Decrease slightly
  • 0% Decrease substantially

(The category of responders who believe that there revenues will increase substantially increased 9% from 36% in Q1)

15. Considering the current economic climate, how likely would your be to start a new business in 2010 compared to 2009?

  • 23% Very likely
  • 36% Somewhat likely
  • 26% Equally as likely
  • 13& Somewhat unlikely
  • 3% Very unlikely