While business is not yet roaring back, U.S. sign companies are expressing the most confidence in four years in future business prospects, according to the latest business confidence index from the Sign Analytics research program co-sponsored by Sign & Digital Graphics and The Visual Information Group LLC.
The research collaboration, now in its fifth year, measures business conditions and outlook among U.S. sign companies. The latest results are based on surveys completed by nearly 425 sign companies in January.
The January survey asked sign companies to look back to the last six months of 2011, and compare their sales results for that period with their expectations for sales for the first six months of 2012. Available replies were: much better, better, about the same, worse, and much worse.
Of respondents, 59.8 percent saw business improving (much better or better), 31.7 percent saw a stable business outlook (about the same), and just 8.5 percent saw worsening (worse or much worse) business six months ahead.
By comparison, two years earlier, of the January 2010 survey respondents, just 45.2 percent saw business improving, 37.3 percent expected business to stay about the same, and 17.5 percent thought business would get worse.
Because the exact same questions have been asked in each of the Sign Analytics surveys, research results can be expressed as an index number. The numerical averages of replies from the first survey in June 2008 are expressed in Chart A: Business Confidence Index as a base number of 100. Index numbers below 100 indicate a worsening of business confidence, while a number above 100 would indicate improved confidence, relative to the June 2008 survey.
Chart A. © 2012 The Visual Information Group LLC
Respondents in the surveys also have been asked to compare current business levels with business a year earlier. These results measure not expectations, but actual business conditions for a sign company. Thus, the index numbers in Chart B: Business Conditions Index show a much lower index number in 2008 and 2009. Of note, half of the respondents said business had improved compared with a year earlier, while a quarter still reported that sign sales had worsened.
Chart B. © 2012 The Visual Information Group LLC
Yet it is an especially strong indicator for the U.S. sign industry that both the business confidence (future expectations) and business conditions (actual sales comparisons) index number now are higher than in June 2008—coincidentally before the economic downturn began in earnest.
For the past three surveys, questions have been included to gain understanding of the types of credit used by sign companies, and the degree of difficulty in obtaining those funds compared with a year earlier period.
As shown in Chart C: Credit Use by Type, eight sources of credit are shown, and of the respondents, the percentage that have used each of those sources. Business credit cards, bank loans, and personal credit cards were the leading sources of credit in each of the three years.
Chart C. © 2012 The Visual Information Group LLC
The biggest change—and no surprise given the collapse of the housing market—is that 19.8 percent of respondents used a home equity line of credit in 2010 while just 8.5% depended on that funding source in the January survey.
The “Other” credit sources consistently over the three years had listed investing business profits back into the business, and what I can describe in three words: Just. Pay. Cash.
Sign companies were asked for additional thoughts, and have responded with viewpoints including, “Optimism is a wonderful asset for any business, as long as you also are practical!” Also, a signshop noted, “Still too much capacity and negative pricing pressure.” But one company said, “Optimistic as other shops are closing.”
It is fitting to include thoughts from a brand-new sign company, and one celebrating more than a quarter-century in business. The first, a new digital sign and graphics company from Texas, said:
“This was our first year of business and needless to say we were a little concerned. We were very considerate of where we were doing business and how much our services were needed. Making the commitment and investment in a store front was way out there for me, but I realized no one else was doing it and that is what would make the difference.
“Giving our community a resource for small business start up assistance, concerning exposure, would be the key in this economy. Unemployment runs out and the next option for many has had to be self employment, with or without confidence. When they come in my store, most are a little scared. Being able to help them see it as a huge possibility rather than as a risk means they leave encouraged and more excited than scared. So the economy may have been lemons, but we have been able to make the lemonade!”
The more veteran sign shop looked back, and ahead, with this perspective: “Celebrating our 27th year in business and debt free. Managed our finances carefully and never bounced a check once in 27 years. We expected the recession to come eventually and stayed out of debt for the past 5 years. We have owned our shop building, business, equipment, vehicles, private home and property for the past 5 years. I paid cash for my latest digital printer. I advise others to build their business the way I did and don’t purchase it if you have to become a slave to the lender. I really don’t care what my credit score is.”
Next month: In April, we will publish the second part of the 2012 Sign Analytics research on U.S. sign market sizing, plus a perspective from David Williamson on the occasion of his 30th anniversary in the sign industry.