Revenue Outlook Remains Flat, While Hiring
Plans Drop to Five-Year Low
U.S. small business owners’ confidence in the economy has
increased significantly from just six months ago, according to the
spring 2017 Bank of America Small Business Owner Report, which
found that economic confidence ranks among the highest levels
recorded in the last five years.
The report, based on a semi-annual survey of 1,000 small
business owners across the country, reveals that a majority of
entrepreneurs (52 percent) are confident the national economy will
improve over the next 12 months – up a staggering 21 percentage
points from just six months ago. Similarly, small business owners’
confidence in their local economy improving jumped to 50 percent
from 37 percent in fall 2016.
This increase in optimism, however, has yet to translate into
positive movement on revenue expectations or five-year growth
plans, which remain flat since the fall. This spring:
- 48 percent expect their revenue to
increase over the next 12 months (compared to 52 percent in fall
2016).
- 56 percent plan to grow their business
over the next five years (compared to 55 percent in fall
2016).
In addition, plans to hire have dipped to their lowest point in
five years with 18 percent of small business owners surveyed
planning to hire in the year ahead, down 7 percentage points from
fall 2016. Instead, those surveyed this spring say they are focused
on retaining existing employees. Additionally, plans to apply for a
loan in 2017 are tracking similarly to fall 2016, with 9 percent of
small business owners surveyed planning to apply in the year ahead.
The top reported plans for using loan funds include marketing the
business (42 percent), investing in new equipment (34 percent) and
expanding operations (28 percent).
“What our survey shows is a significant shift in the mindset of
small business owners from just six months ago,” said Sharon
Miller, head of small business, Bank of America. “Although some
uncertainty remains with respect to hiring and revenue, the
increase in general optimism is certainly a promising indicator of
potential growth for small businesses in 2017.”
Economic concerns drop, though health care continues to weigh
heavy
The survey also found that concerns over most economic factors
have decreased significantly from six months earlier, with the most
significant declines from fall 2016 showing in:
- Strength of the U.S. dollar (36
percent, down 16 percentage points).
- Stock market (34 percent, down 16
percentage points).
- Health care costs (64 percent, down 11
percentage points).
However, while concerns have declined, health care costs
continue to be a chief worry for small business owners, driven by
both the business cost and individual cost for employees. Forty-two
percent report concern over the health care costs their employees
must bear.
Of small business owners surveyed who provide health insurance
for employees, half felt cost increases have worsened in the last
five years, compared to just 21 percent who believe this has
improved, and 29 percent reporting no change. On the issues of
health care quality and availability, small business owners were
split, with the greatest number believing there’s been no change
(46 percent and 48 percent, respectively).
More than one-quarter of small businesses surveyed with fewer
than 50 employees provide an employee health benefit, even though
the law doesn’t require it.
Despite nightmares and long hours, small business owners
happy with work-life balance
When asked to describe an average work week, 47 percent said
“demanding,” and 30 percent said “stressful.” One-quarter have even
had a nightmare about their business failing. Despite this, many
still characterize running their business as “fulfilling” (52
percent), “interesting” (52 percent) and “enjoyable” (51
percent).
Millennial small business owners, in particular, noted that they
are stressed about the business environment. Despite more ambitious
revenue expectations as well as long-term growth and hiring plans,
42 percent of millennials report having had a nightmare about their
business failing (vs. 28 percent of Gen-Xers and 23 percent of baby
boomers).
Though many small business owners tend to work overtime — with
more than three in five reporting they work more than 40 hours a
week — 81 percent are satisfied with the number of hours they work.
Nearly all value the flexibility of their work location and
schedules, as well as the amount of time they can spend with family
and close friends. While more than three-quarters admit work
interferes with their home life, small business owners are more
likely to report they have achieved a work-life balance (82
percent).
For those who have not achieved balance, entrepreneurs report
that key roadblocks include too many administrative tasks (46
percent), customers or clients requiring individual attention (44
percent), not having the financial resources to hire additional
staff (38 percent) and not having enough employees to run the
business without their support (34 percent).
Entrepreneurs envision a virtual, more automated
future
When asked for their top predictions about small business 20
years from now, most entrepreneurs envision a virtual and automated
future. Top predictions include:
- More offices will be virtual rather
than physical locations (49 percent).
- Operations will be conducted by
automation (42 percent).
- Businesses will go paperless (42
percent).
Seventy-five percent of entrepreneurs surveyed say encouraging
innovation in the workplace is a priority, and 77 percent say it is
a key contributor to business success (compared to 95 percent and
99 percent of entrepreneurs in the tech industry, respectively).
Thirty-seven percent say they are “industry-leading” or “ahead of
the curve,” while 52 percent say they “keep the same pace” with
other businesses in their sector. For those in the tech industry,
59 percent consider themselves “industry-leading” or “ahead of the
curve,” and one-third are keeping pace.
Technology sector small business owners surveyed are more likely
to predict that most businesses will employ a robot in 20 years,
compared to their national counterparts (18 percent in the tech
industry vs. 10 percent nationwide). They are also more likely to
consider themselves innovative leaders (73 percent vs. 53 percent
nationwide) and to say that technology is the biggest contributor
to the innovative steps they have taken (43 percent vs. 36 percent
nationwide).
For a complete, in-depth look at the insights of the nation’s
small business owners, read the spring 2017 Bank of America
Business Advantage Small Business Owner Report, and for additional
insights, download the Small Business Owner Report infographic
here.
Bank of America Business Advantage Small Business Owner
ReportGfK Public Communications & Social Science conducted the
Bank of America Business Advantage Small Business Owner Report for
spring 2017 online between February 21 and March 19, 2017 using a
pre-recruited online sample of small business owners. GfK contacted
a national sample of 1,001 small business owners in the United
States with annual revenue between $100,000 and $4,999,999 and
employing between 2 and 99 employees. Additionally, a total of 300
small business owners were surveyed in 10 target markets: Atlanta,
Boston, Chicago, Dallas/Fort Worth, Houston, Los Angeles, New York,
Miami, San Francisco and Washington, D.C. An oversample of 150
interviews was also completed among respondents in the technology
and medical/health care fields. The final results were weighted to
national benchmark standards for size, revenue and region.
Waves of the Small Business Owner Report before 2016 were
conducted by telephone, and while best efforts were made to
replicate processes, differences in sample, weighting and method
suggests caution when making direct statistical comparisons to
results from previous years.
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America is a global leader in wealth management, corporate and
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classes, serving corporations, governments, institutions and
individuals around the world. Bank of America offers
industry-leading support to approximately 3 million small business
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and services. The company serves clients through operations in all
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Reporters May Contact:Don Vecchiarello, Bank of America,
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