Small Businesses on Track to Beat Revenues as Confidence in the Economy Surges, According to Bank of America Survey

Urban Entrepreneurs Plan for Growth, Rural Counterparts Foresee
Improvements in the Economy

CHARLOTTE, N.C.–(BUSINESS WIRE)–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
  • 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

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 Report
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.

Bank of America
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approximately 24 million mobile users. Bank of America is a global
leader in wealth management, corporate and investment banking and
trading across a broad range of asset classes, serving corporations,
governments, institutions and individuals around the world. Bank of
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business owners through a suite of innovative, easy-to-use online
products and services. The company serves clients through operations in
all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto
Rico and more than 35 countries. Bank of America Corporation stock
(NYSE: BAC) is listed on the New York Stock Exchange.

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Reporters May Contact:
Don Vecchiarello, Bank of America,