Spring is in the air, and optimism is in small business owners’ hearts and minds—at least, according to the Spring 2018 Bank of America Small Business Owner Report. The semi-annual study reports some of the highest levels of optimism among U.S. entrepreneurs since the survey began in 2012.
Confidence in the national economy as well as the respondents’ local economies is at a near-record high. More than half (54 percent) of respondents believe the national economy will improve in the next 12 months, while 56 percent believe their local economies will improve.
Small business owners are also feeling good about their businesses’ futures. Six in 10 expect revenue to increase in the next 12 months, compared to 48 percent last year, while 69 percent plan to expand in that time period and 22 percent plan to hire.
Bumps in the Road
Despite the optimism, concern is growing over a number of economic issues, including:
- Healthcare costs: 75 percent are concerned, up from 64 percent last year
- Interest rates: 51 percent are concerned, an increase from 37 percent last year
- Commodities prices: Half of entrepreneurs are concerned about rising commodities costs, up from 36 percent last year
- Consumer spending: 45 percent are concerned, compared to 42 percent last year
- Corporate tax rates: 44 percent are worried about tax rates, up from 39 percent last year
- U.S. and/or global stock market: 43 percent are concerned, up from 34 percent last year
- Credit availability: A concern for 32 percent of respondents, compared to 25 percent last year
Tax Policy: a “Game-changer”
Small business owners are also optimistic about recent changes to tax law. More than seven in 10 expect to see savings as a result, and 63 percent say the changes make them more positive about their business outlook. Here’s how they’ll use the savings:
- 34 percent will increase profits
- 21 percent will reward employees with raises/bonuses
- 14 percent will hire new employees
- 14 percent will expand operations
- 12 percent will pay off a loan
- 12 percent will make capital improvements
Related Content: Business Income from Pass-Through Entities: The new 20% deduction
Technology: Opportunities and Threats
Nearly four out of five respondents update their technology at least annually; 17 percent make technology updates quarterly, and 12 percent do so monthly. Technology is making small businesses so efficient that one in 10 respondents has eliminated positions as a result.
What technology are small business owners using or exploring?
- Internet of Things: 24 percent
- Data analytics: 15 percent
- 3D printing: 11 percent
- Artificial intelligence: 7 percent
- Virtual reality: 7 percent
- Drones: 5 percent
- Robots: 2 percent
Small business owners also embrace smartphones, with 89 percent using them for business operations including online banking (41 percent), social media updates (38 percent) and digital payments (29 percent). More than half (52 percent) of business owners believe that within five years, all payments will be digital, and almost two in 10 expect to accept cryptocurrency as payment within that timeframe.
But while technology has meant many positive changes for small business owners, it also means greater vulnerability. Over three-fourths (77 percent) of entrepreneurs describe their businesses as “dependent” on technology. Although only 8 percent of respondents were affected by a data breach in the past year, many of those suffered significant consequences, including compromised business information (48 percent), financial losses (42 percent) and compromised customer data (27 percent).
One stat floored me: Only 59 percent of the entrepreneurs in the survey have a business website. The report suggests business websites have become less significant as the internet has become part of our daily lives, but I’d argue it’s exactly the opposite.
Of those who do have websites, 60 percent use them to share information, while only 31 percent use them to drive sales. With so many ways to get prospects to your website via online advertising, social media and search engine optimization, if you're not using your website as a sales tool, you’re leaving money on the table and missing out on a huge opportunity. (I wrote more about this here.)
How do the survey respondents’ habits, outlooks, and attitudes compare to yours?
Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the blog SmallBizDaily.com. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years. Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous local and national television programs, including the Today Show, Good Morning America, CNN, The Martha Stewart Show and Oprah.
Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.
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