Urban Entrepreneurs Plan for Growth, Rural
Counterparts Foresee Improvements in the Economy
The core of the U.S. small business sector is solid, with many
entrepreneurs expressing confidence that they will generate higher
year-end revenues compared to 2016, and that the 2018 economy will
improve. According to the fall 2017 Bank of America Business
Advantage Small Business Owner Report, a semi-annual survey of
1,000 business owners across the country, nearly three-quarters of
entrepreneurs are optimistic their 2017 year-end revenue will
surpass 2016 revenue. Confidence in the economy also surged as
nearly half of business owners expect their local economy and the
national economy to improve in the year ahead (up 11 percentage
points and 15 percentage points, respectively, from fall 2016).
The positive outlook on the economy bodes well for growth, as 92
percent of small business owners indicated that a positive economic
environment is a critical factor to their ability to grow. Other
growth factors include customer demand (93 percent), the ability to
attract and retain quality employees (76 percent), favorable
government policies (76 percent) and access to capital (63
percent).
The report, however, also found that long-term growth plans
remain unchanged from fall 2016, as 51 percent of small business
owners plan to grow their business over the next five years. In
addition, plans to hire are down year-over-year as 16 percent of
entrepreneurs plan to hire more employees in the year ahead (vs. 25
percent in fall 2016).
“Entrepreneurs continue to be upbeat about future economic
growth as they set their sights on 2018,” said Sharon Miller, head
of small business, Bank of America. “Small business owners are
optimistic about their ability to close the year strong and the
outlook for the economy in the year ahead. However, these surges in
small business owner confidence have not yet translated into plans
for long-term growth.”
Rural business owners more confident about economy, urban
counterparts more optimistic on revenue, growth and hiring
The report also revealed that entrepreneurs in urban areas have
the most dynamic business outlooks and plans for growth, while
their rural counterparts are more upbeat about the economy.
Specifically:
- Fifty-seven percent of urban
entrepreneurs plan to grow their business over the next five years
(vs. 50 percent of their rural peers).
- Fifty-two percent of urban business
owners are confident that their revenue will increase in the coming
year (vs. 47 percent of rural entrepreneurs).
- Twenty percent of urban entrepreneurs
plan to hire in 2018 (vs. 15 percent of rural business
owners).
Conversely, rural entrepreneurs’ confidence in the national
economy tops that of their urban counterparts. Fifty-one percent of
rural business owners believe the national economy will improve
over the next 12 months, compared to 45 percent of business owners
in urban areas.
For urban and rural business owners, there are several areas
where the level of economic concern varies widely based on
location. Urban entrepreneurs are more concerned than their rural
counterparts about the U.S. and/or global stock market (52 percent
of urban vs. 33 percent of rural) and credit availability (36
percent of urban vs. 25 percent of rural). Meanwhile, rural
business owners are more concerned than urban entrepreneurs about
the strength of the U.S. dollar (60 percent of rural vs. 48 percent
of urban), consumer spending (56 percent of rural vs. 40 percent of
urban) and commodities prices (53 percent of rural vs. 45 percent
of urban). Even with these differences, the cost of health care
tops the list of economic concerns for both urban and rural
business owners (70 percent and 72 percent are concerned,
respectively).
A snapshot of small business owners across generations and
genders
The report also revealed varying levels of business owners’
optimism and future expectations when cutting across generations
and genders. Specifically, millennial entrepreneurs have a
significantly more optimistic outlook in a number of areas,
including:
- Eighty-one percent expect their revenue
to increase in 2018 (30 percentage points higher than the national
average).
- Forty-three percent plan to hire in the
year ahead (27 percentage points higher than the national
average).
- Seventy-six percent plan to grow over
the next five years (25 percentage points higher than the national
average).
- Sixty-three percent expect their local
economy to improve within the next 12 months (15 percentage points
higher than the national average).
Meanwhile, male business owners are more confident than their
female counterparts that the national economy will improve in 2018
(51 percent of men vs. 40 percent of women), but women
entrepreneurs are more likely to expect their revenue to increase
in the year ahead (55 percent of women vs. 48 percent of men). When
it comes to hiring, men and women entrepreneurs are on the same
page, with 16 percent of both genders planning to hire in 2018.
Side-by-side demographic comparisons are available in the full
report.
Face-to-face vs. virtual space
Surprisingly, fewer than half of entrepreneurs say social media
and virtual communities are critical to many aspects of their
business. Only 24 percent rely on social media for hiring, 37
percent use it to sell goods and services, and roughly two in five
use social platforms to share updates with customers. Just 30
percent say social media has had a positive impact on their
business’ bottom line in the past year. Instead, nearly
three-quarters of business owners say they rely more on in-person
interactions and networks for support running their business.
While social platforms aren’t seen as critical to small business
success, digital tools that help businesses manage daily business
operations are. Nearly three-quarters of entrepreneurs use at least
one digital tool to run their business, with digital banking (46
percent) and financial tracking and/or accounting apps (34 percent)
reported as the most popular tools.
Not all small business owners downplay the role of social media.
Millennial entrepreneurs buck the national trend, reporting they
are much more reliant on social media for sharing updates with
their customers (74 percent), selling goods and services (66
percent) and hiring employees (56 percent). Forty-nine percent of
millennials say social media has had a positive impact on their
business’ bottom line in the past year, a full 19 percentage points
higher than the national average. And, half of millennials
primarily turn to virtual communities to connect with others about
business matters. This generation is also the most likely to use
digital tools—nine out of 10 use at least one for daily operations,
and 49 percent of millennials use digital banking.
As hiring focus shifts, raises and rewards key to retention,
while employee talent remains a key factor for growth
While plans to hire in the year ahead have cooled (16 percent in
fall 2017 vs. 25 percent in fall 2016), entrepreneurs are focused
on maintaining current staffing levels (76 percent in fall 2017 vs.
64 percent in fall 2016), and very few plan to downsize. Of those
who are planning to hire in 2018, 70 percent plan to bring on
full-time employees, and just over half plan to hire part-time
staff. Fewer than one in five plans to hire freelancers,
independent contractors, interns or seasonal employees.
Small business owners continue to be thoughtful about retaining
talent, with more than half taking steps within the past two years
to do so, such as offering flexible hours or work locations (34
percent), providing perks such as office happy hours (17 percent)
and giving spot bonuses or rewards (15 percent). Eighty-nine
percent of entrepreneurs provide wage increases and promotions,
with most raises given on an unscheduled basis (55 percent) driven
by either employee performance or positive business growth.
Meanwhile, 22 percent give raises every year, no matter what.
When asked about the top factors impacting business growth, more
than three-quarters of business owners cited their ability to
attract and retain quality employees.
For a complete, in-depth look at the insights of the nation’s
small business owners, read the fall 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 Small Business Owner Report survey for fall of 2017
online between August 8 and September 28, 2017 using a
pre-recruited online sample of small business owners. GfK contacted
a national sample of 1,013 small business owners in the United
States with annual revenue between $100,000 and $4,999,999 and
employing between two and 99 employees. In addition, a total of
approximately 300 small business owners were also surveyed in each
of 10 target markets: Atlanta, Boston, Chicago, Dallas, Houston,
Los Angeles, New York, Miami, San Francisco and Washington, D.C.
Approximately 150 interviews were also completed among respondents
in the tech and medical/health care fields. The final results were
weighted to national benchmark standards for size, revenue and
region.
Prior to 2016, previous waves of the Small Business Owner Report
survey 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
of the results from pre-2016 and post-2016.
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and individuals around the world. Bank of America offers
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version on businesswire.com: http://www.businesswire.com/news/home/20171107005066/en/
Reporters May Contact:Don Vecchiarello, Bank of America,
1.980.387.4899don.vecchiarello@bankofamerica.com
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