Main Street Is Open for Business: Bank of America Survey Reveals Strong Economic Outlook Among Small Business Owners
Small Business Owner Optimism and Confidence in the Economy Is at Its Highest Level Since 2012
America’s small businesses are gearing up for growth. According to the fall 2015 Bank of America Small Business Owner Report, small business optimism is at its highest since the survey’s inception in 2012, with expectations for revenue growth and plans to hire hitting a three-year high.
The report, based on a semi-annual survey of 1,000 small business owners across the country, revealed that 72 percent expect their revenue to increase in the next 12 months, compared with 62 percent a year ago. In addition, more small businesses expect to increase staffing, with 67 percent planning to hire more employees over the next 12 months, up significantly from 51 percent in the fall of 2014 and 31 percent in the fall of 2013.
Confidence in the local, national and global economies rose as well:
- Sixty-two percent expressed optimism for their local economies (a 12 percentage point rise year over year).
- Fifty-six percent expressed optimism for the national economy (an 11 percentage point rise year over year).
- Forty-five percent expressed optimism for the global economy (a 14 percentage point rise year over year).
This optimism was seen even as small business owners expressed apprehension over the 2016 presidential election, minimum wage hikes and an increase in interest rates, as more than one-third of those surveyed expressed concern that these factors could impact their business in 2016.
“We’re seeing a dramatic increase in optimism among small business owners in the economy, revenue growth and hiring,” said Robb Hilson, Bank of America Small Business executive. “Even with instability in the global markets and the uncertainty they have about the upcoming election, small business owners are confident and ready to expand their businesses. They are seeing the light at the end of the tunnel, and we commend them for their entrepreneurial spirit and stamina through a challenging economic time.”
Not surprisingly, this expected growth demands more capital. More than one in three small business owners (35 percent) say they will apply for a loan in 2016, an 11 percentage point increase over one year ago. In addition, the number of small business owners who report they have applied for a loan in the past two years has increased by more than 50 percent in the last 12 months, rising from 29 to 44 percent.
Small business owners embrace workplace 2.0
The workplace culture of the traditional small business appears to be changing, as working environments become more technology-oriented and flexible. For example, most small business owners (88 percent) say that technology is helping them better serve customers, and half have invested in new technology over the past five years to better connect with employees. Nearly three-fourths (71 percent) report that they are investing in technology upgrades one or more times per year.
Forty-seven percent of small business owners are now offering telecommuting options – a 12 percentage point jump from five years ago. Most small business owners report a positive impact from this shift, including a better attitude in employees (59 percent) and increased productivity (54 percent). However, some small business owners expressed concerns that telecommuting makes employees unreliable or inaccessible (34 percent), or harder to trust (33 percent).
Employee benefits are also changing, with small businesses taking a page out of the startup book by offering perks like areas to relax or unwind such as nap pods and game rooms (20 percent), pet-friendly work environments (11 percent) or onsite gyms and fitness classes (8 percent).
Small businesses prepare for cyber-attacks as holiday season draws near
As technology advances, so do cybersecurity threats. More than one in 10 (12 percent) small business owners report that they have been the victim of a cybersecurity breach. With technology being so prevalent, more than half (59 percent) have expressed concern over protecting their proprietary data, and 66 percent report they have taken measures to be prepared for a cyber-attack.
These measures may pay off during the holiday shopping season. Small business owners expect a boost to their business bottom line during Black Friday and Cyber Monday, even more so than a year ago, with 31 percent expecting Black Friday to provide a bump in sales in 2015 (compared to 17 percent in 2014), and 43 percent expecting Cyber Monday to have an impact on their business’ bottom line, compared to 29 percent one year ago.
Local insights across the country
The report also analyzed the mindset of small business owners in nine local markets across the country. Key insights gathered include:
- Like their national counterparts, most small business owners in a number of markets are planning for growth over the next five years. Small business owners in Washington, D.C. (81 percent), Miami (80 percent) and Dallas/Fort Worth (78 percent) plan to grow their business over the next five years. Additionally, small business owners in Atlanta (73 percent), San Francisco (71 percent) and Metro New York (70 percent) expect their revenues to increase in the next year.
- Optimism in an improving local economy followed the national trend within local markets as Washington, D.C. (65 percent), Dallas/Fort Worth (63 percent) and Boston (52 percent) small business owners are feeling increasingly confident in their local economy compared to one year ago. In fact, Los Angeles was the only market surveyed where local small business owners were less confident that their local economy would improve over the next 12 months (53 percent, versus 62 percent in fall 2014).
- Small business owners across all markets, including Chicago (44 percent), Washington, D.C. (42 percent) and Los Angeles (41 percent), agree with their national counterparts that their workplace has become more tech-focused over the past five years. In addition, San Francisco (50 percent) and Washington, D.C. (47 percent) small business owners feel that their workplace has become more collaborative.
For a complete, in-depth look at the insights of the nation’s small business owners, download the entire fall 2015 Bank of America Small Business Owner Report (PDF), and for additional insights, download a PDF version of the Small Business Owner Report national infographic here.