SBRB reports fewer manufacturers preparing for growth in next 12 to 24 months

December 11, 2007

Fewer small manufacturing businesses indicated during the third quarter of 2007 that they are planning for expansion during the next 12 to 24 months, according to the most recent quarterly survey cosponsored by International Profit Associates (IPA), Buffalo Grove, Ill., and the Small Business Research Board (SBRB), Northfield, Ill.

Of the owners and managers responding to the national survey, 25 percent plan to expand their businesses during the next 12 to 24 months, down 4 points from the 29 percent who responded similarly during the second quarter.

Prospective facilities-based activities—expansion at current locations and the addition of new locations—lwere noted by 39 percent of respondents that intend to expand as their primary methods for increasing business. Twenty-one percent of participants mentioned expansion at current locations, while 18 percent said they plan to add locations. Enhancing customer services capabilities had 20 percent of the vote. Addition of new products was cited by 18 percent as their primary method for expansion, while 11 percent cited providing more services.

To improve productivity, participants view adding automation or technology as the top approach to improving operating efficiency, followed by improved staff training, adding staff, and improving existing automation.

More than 800 small businesses participated in the poll. The SBRB Manufacturing Industry Small Business Confidence Index (SBCI) was 38.33 during the third quarter, after posting a 40.3 the previous quarter. In addition, the SBCI for all U.S. small businesses dropped to 43 during the third quarter, 3 points lower than the previous period. The key aspects that determine the SBCI are opinions and projections for the next 12 months about the strength of the economy, revenues, and hiring.

The historical SBCI high occurred during the first quarter of 2005, when it reached 52 points; the historical low occurred in the third quarter of 2005, when it fell to 39.3 points.

The SBRB reports the opinions of small-business owners and managers on various topics related to their own businesses, as well as national and international issues. IPA is a privately held provider of management consulting services to small and medium-size businesses in North America.