May is Small Business Month at Bank of America, highlighted by the release of our spring Small Business Owner Report, a semi-annual study that explores the concerns, aspirations and perspectives of small business owners throughout the U.S.
Citing their anxiety over government leaders and the upcoming election, small business owners’ confidence in the national economy has been tempered, according to Bank of America’s spring 2016 Small Business Owner Report (PDF). Bank of America conducts this survey of small business owners twice a year, releasing its spring report to coincide with National Small Business Week, which began this past Sunday.
This year’s spring report found that small business owners’ confidence in the national economy has fallen 19 percentage points over the last year, from 48% in spring 2015 to 29% now, while confidence in their local economies is down 11 percentage points, from 49% in spring 2015 to 38% in spring 2016.
Despite some concerns, anxiety over economy trends down
The biggest factors leading to this downturn in optimism are the concerns small business owners harbor about the effectiveness of U.S. government leaders, health care costs and the stock market. Nearly four-fifths of small business owners expressed concern that the effectiveness of U.S. government leaders will impact their business, a 10 percentage-point increase from spring 2015.
In fact, small business owners expect the presidential and congressional elections to impact them, and are taking their business into account when voting:
- 67% report that this year’s presidential election will affect their business “a lot” or “somewhat”
- 53% report that the upcoming congressional elections will affect their business “a lot” or “somewhat”
Health care costs are also a big concern with almost three of every four small business owners concerned about the impact on their business. Small business owners are also watching the U.S. and global stock markets, with more than half fearing an impact on their business.
However, the news isn’t entirely pessimistic as small business owner anxiety about other economic factors declined since spring 2015. For example, their concerns dropped by double digits on consumer spending, interest rates and credit availability. There was also a downward shift in concern over commodities prices, corporate tax rates and strength of the U.S. dollar.
“Small business owners are taking a wait-and-see approach before making plans for expansion and growth,” said Robb Hilson, Small Business executive. “Interestingly, while anxiety over the U.S. and global stock market has increased since last year, concern over the other economic factors we surveyed has declined.”
Small business owners revise hiring, growth plans
As Robb indicated, small business owners are not aggressively planning for growth, but they also don’t anticipate downsizing. This wait-and-see approach most likely stems from the pending outcome of the presidential election and policy questions that hang in the balance.
Small business owners are less bullish on revenue growth and expansion plans, with only half expecting a revenue increase over the next 12 months, while 40% say they expect their revenue to remain flat over that same time period. While 55% of small business owners still plan to grow their business over the next five years, the number of those who anticipate doing so is down from previous years.
“The small business owners we surveyed indicated their revised revenue and growth projections also affect the plans they had to add more employees,” Robb said. “In fact, the majority of small business owners we surveyed this spring plan to keep the same number of employees over the next 12 months, perhaps suggesting they are waiting until after the election to reassess hiring plans.”
Small business owners prefer to hire Gen-Xers
When they are hiring, small business owners indicated a strong preference for Generation X candidates. Nearly half report that skill level is the single most important factor in hiring, followed by a candidate’s fit with company culture. Small business owners reported that other factors, such as previous work experience and education, were less critical in hiring decisions.
In general, small business owners favor candidates who are trustworthy, hardworking and experienced. They are less concerned with sales ability and tech savviness — or even a college degree — when evaluating prospective hires.
They are finding those qualifications most in job candidates who are between 35 and 50 years old. Nearly half (47%) say they would choose to hire Gen-Xers, while 26% prefer Millennials, and 8% gravitate toward Baby Boomer candidates.
Learn more in the report
For a complete, in-depth look at the perspectives of the nation’s small business owners, read the spring 2016 Bank of America Small Business Owner Report (PDF), and for additional information view the Small Business Owner Report national infographic.