MCLEAN, Va., Sept. 29, 2015 /PRNewswire/ -- Small business
owners are feeling less optimistic about the economy and growth
compared to earlier this year, according to Capital One's Spark
Business Barometer, an ongoing survey measuring the economic
perceptions and financial conditions of small business owners, as
well as the most common trends and challenges facing entrepreneurs
and local businesses today.
According to the survey, less than a third (31 percent) of
business owners reported improved financial positions over the past
year, down four points since March. Growth expectations also fell,
with only 38 percent expecting improved financial position in the
next six months, down from 47 percent in March. Despite the stalled
optimism, business owners plan to increase investments in key areas
including: solutions that drive efficiency (34 percent), expanded
workforces (20 percent), and new technology to improve client
interactions (18 percent).
"Business owners appear to be slightly more cautious given
recent market turbulence, pending regulations, and the upcoming
election cycle – all posing a variety of uncertainties about the
future," said Buck Stinson, Head of
Small Business Card at Capital One. "At the same time, it's
encouraging to see business owners taking the steps needed to
remain competitive – prioritizing and investing in solutions that
drive efficiency and enable growth."
Capital One's Small Business Confidence Score
Capital
One's Small Business Confidence Score is an analysis of small
business sentiment data collected by the Spark Business Barometer –
looking at economic sentiment, hiring plans, recent sales, and
future outlook. According to the Small Business Confidence Score,
business owners are more cautious, feeling less certainty about
their business' conditions and future outlook, and more reluctant
to hire additional staff in the next six months.
*The Capital One Small Business Confidence Score evaluates
responses to a series of questions from the Spark Business
Barometer and ranges from -100 (very low confidence) to +100 (Very
High Confidence).
The latest Spark Business Barometer uncovered the following
insights related to small business sentiment and plans for the
future:
Business owners are cautious amid economic and financial
uncertainty. As financial markets continue to fluctuate, The
Spark Business Barometer uncovered that business owners are more
cautious in their spending, forecasting and overall outlook on
current financial conditions.
- Fifty percent of small business owners feel business conditions
in their area are fair or poor.
- Only 31 percent of business owners feel their firm's financial
position is improved compared to 12 months ago; in our last
Barometer (March 2015), 35 percent of
respondents affirmatively answered this question.
- When considering business outlook, 38 percent believe they will
be in a better position in the next six months – a decrease of nine
points (47 percent) from March
2015.
Amid uncertainty, women and millennial-owned businesses
continue driving optimism. In addition to their optimism, both
millennials and female business owners admit to having increased
sales in the last six months. Fifty-seven percent of millennials
reported increased sales in the last six months, leading all other
generations by more than 15 percentage points.
- Fifty-six percent of female small business owners believe
current business conditions are excellent or good vs. 44 percent of
males.
- Seventy-one percent of millennials (18-34 year old) believe
current business conditions in their area are excellent or good
(compared to 47 percent of Gen X (35-49 years old), 46 percent of
Baby Boomers (50-69 years old), and 45 percent of Mature (70+ years
old).
- Forty-nine percent of millennials believe their financial
position is better than a year ago compared to 36 percent GenX, 28
percent Baby Boomers, 23 percent Mature.
Small businesses are struggling to keep up with the pace of
technology, and lack tools that drive efficiency. As small
businesses work to establish themselves and grow, they struggle in
key areas that limit growth opportunities. According to the survey,
following are some of the top challenges business owners face:
- Finding efficient ways to operate business (34 percent)
- Managing business expenses (32 percent)
- Managing cash flow (25 percent)
- Finding the right software, technology, and/or management tools
(16 percent)
Mobile and digital adoption stalls when it's needed most.
Small businesses regularly admit to experiencing challenges with
running their business. Adopting new technologies is one approach
they can take to increase productivity, organizational efficiency,
and even sales – yet many have not embraced technology solutions
designed to address their unique needs.
- Eighteen percent of small business owners plan on investing in
technology solutions that improve client interactions (e.g.,
proprietary mobile app), even though 34 percent would like to find
ways to increase efficiency within their business.
- Fourteen percent of small businesses currently manage their
business finances on a mobile phone.
- Twelve percent plan on increasing investments in e-commerce and
digital tools.
- Six percent will increase investment in digital payment
solutions such as Apple Pay.
Many business owners are still unaware of EMV requirements
and chip-enabled credit cards. As of October 1, 2015, all merchants accepting payments
will need to be certified as EMV-compliant, and will be held
responsible for card-present counterfeit fraud losses if they
aren't compliant. Multiple studies, including the Spark Business
Barometer, show many small business owners lack awareness of these
soon-to-come changes.
- Only two in every five business owners (43 percent) are
currently familiar with EMV, chip, or PIN-enabled credit
cards.
- Of the 43 percent of respondents familiar with EMV, chip, or
PIN-enabled credit cards, only 34 percent currently accept them as
a form of payment (as of August
2015).
- More than half (54 percent) of business owners who are familiar
with EMV, chip, or PIN-enabled credit cards are unaware of pending
regulations that will make businesses liable for fraudulent charges
incurred on other payment systems.
"The new EMV requirements are intended to help protect
businesses from payment fraud, but research shows many business
owners are slow to adopt the new technology for a variety of
reasons," Stinson said. "There are a lot of resources available to
help business owners understand the requirements and make the
transition – and it is important for businesses to comply,
particularly if fraud is a concern."
Capital One also conducted similar research studies within four
U.S. markets including the New York City DMA, San Francisco DMA,
Washington D.C. DMA and the state of Texas.
Capital One is committed to understanding the challenges, trends
and perceptions that affect small businesses' overall performance
and day-to-day operations. Follow along on Facebook at Capital One
Small Business and on Twitter at @CapitalOneSpark. Use hashtag
#SparkBizBarometer to follow the conversation.
Survey Methodology
The following presents a summary
the methodology used to execute Capital One's 1H 2015 Small
Business Barometer Survey, conducted by the market research and
business intelligence firm ORC International. For this
telephone study, ORC interviewed a national sample of 400
for-profit small businesses in the U.S. Small businesses are
defined as those with total annual revenues less than $10 million. Interviews were conducted from
July 15 – August 3, 2015. One respondent per business
was interviewed. The margin of error is +/- 4.9 percentage
points at a 95% confidence level.
The initial sample for this study was constructed using a random
selection from the extensive business database maintained by
Infogroup, Inc., and drawn to be representative of qualifying small
businesses throughout the U.S. by industry, region and employee
size. To compensate for variation in response rate among
different types of businesses, final data were weighted by region
and industry to help ensure the final results are proportionally
representative of the small business population. In
developing the weighting frame, ORC International considered the
impact on comparability with prior waves of the study.
About Spark Business
Capital One® offers a broad
spectrum of financial products and services to consumers, small
businesses, and commercial clients. Spark Business from Capital One
comprises a suite of products and services specifically designed
for small business, including credit cards with unlimited rewards,
no-fee checking and savings, and secure and flexible merchant
service offerings. Spark Business provides tips, resources, and
inspiration to help your business thrive at
www.SparkBusinessIQ.com. For more information, visit
www.capitalone.com/smallbusiness.
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SOURCE Capital One