Study Finds That the Rising Cost of Health Care, the Effectiveness of U.S. Government Leaders and the Recovery of Consumer Spending Are All Top Concerns for Chicago Small Business Owners
Bank of America today released its inaugural Small Business Owner Report1, a semi-annual study exploring the concerns, aspirations and perspectives of small business owners across the country. The survey, which includes an oversampling of small business owners across the Chicago market, found that seven in 10 (69 percent) Chicago small business owners cite Chicago's local economy as important to the success of their business. Additionally, close to four in 10 (37 percent) Chicago small business owners are confident that their local economy will improve over the next 12 months, slightly higher than the 32 percent that are confident the national economy will improve during the same period.
"As Chicago's economy continues down the path of sustainability and growth, small business owners need to be able to better rely on the economic vitality they have helped to create," said Tim Maloney, Illinois market president, Bank of America. "Bank of America remains fully committed to partnering with the city, the local private sector and our small business clients to help them overcome the economic and financial roadblocks they may face so they can continue to focus on their own success, which in turn will keep our great city moving forward."
The survey found that Chicago respondents have a number of specific concerns about the economy's impact on the success of their business, the greatest being the rising cost of health care (76 percent), closely followed by the effectiveness of U.S. government leaders (74 percent) and the recovery of consumer spending (70 percent). Interestingly, the availability of credit was lower on the list of concerns (55 percent) compared to other issues that impact their business.
Despite these concerns, many respondents are optimistic about their own future. When asked how to describe their staffing projections over the upcoming 12 months, 32 percent of Chicago small business owners said they plan to hire more employees in the year ahead, while 47 percent said they plan to keep their staffing projections consistent. Additionally, six in 10 (61 percent) respondents anticipate seeing an increase in revenue over the next year. When asked to cite the most important action that they plan on taking to help generate this revenue, Chicago small business owners overwhelmingly cited marketing their business more to acquire new customers (49 percent), followed by selling more to their existing customer base (16 percent) and maximizing day-to-day cash flow so there is more money to invest in their business (15 percent).
Chicago small business owners' concerns related to finding and maintaining talent
When asked to describe employee turnover over the past 12 months compared to the year before, only 15 percent saw turnover increase, with 74 percent citing that turnover stayed consistent. Yet, Chicago small business owners feel the number one challenge they face as they look to retain top talent is finding employees with the skills required for their business (25 percent), closely followed by finding employees with a good work ethic (22 percent) and offering competitive salaries (19 percent). However, despite acknowledging the importance of attracting and retaining top candidates, half (50 percent) of Chicago small business owners admit to not offering any type of financial benefits package to their employees, with only 23 percent saying that they offer their employees a 401(k) plan.
Chicago small business owners' need for more financial expertise
Only three in 10 (29 percent) Chicago small business owners claim to be very financially savvy when it comes to running their business. The remaining respondents admit to needing occasional or ongoing expert help.Chicago small business owners rely on a wide range of resources for financial guidance, as shown in the graph below.
When asked if they could change one aspect of what their bank provides their business, Chicago small business owners most frequently cited more customized services (13 percent) and an enhanced level of expertise (11 percent), while lowering costs associated with the financial services they receive (1 percent) and making it easier to get a loan (1 percent) ranked extremely low on their priority list.
"Our customers want personal guidance and support from someone knowledgeable about their business and the community their business serves," says Jay Miller, Central region small business banking sales executive. "In response to this growing need, Bank of America is in the process of hiring 1,000 small business bankers across the country – with hiring well underway across Chicago and the Midwest. Through a relationship with a small business banker, Chicago small business owners will have greater access to the advice and solutions they need to better manage their finances and run more efficiently."
Bank of America has continued to actively lend to small businesses across the U.S. and Illinois. In the first quarter of 2012, Bank of America extended $115.1 million in credit across Illinois to businesses with less than $20 million in revenue. This number includes $49.7 million in new originations, which has helped enable Bank of America to exceed its national small business lending pledge to the White House and the SBA.
According to the Bank of America Small Business Owner Report, 57 percent of Chicago small business owners believe they currently have enough capital to effectively run their business. When asked what their biggest challenge is with managing cash flow, respondents cited not getting paid on time by clients and customers (46 percent) at the top of their list, followed by low profits and lack of business (21 percent).
Of the 300 Chicago small business respondents, 41 percent have applied for a loan within the past two years and of those, 75 percent were approved.
Chicago small business owners make personal sacrifices to achieve success
The positive outlook that many Chicago small business owners are taking comes at the expense of personal sacrifices they're making in other areas of their lives, such as regularly forgoing free time (50 percent) and exercise (41 percent). Such sacrifices may be contributing to the high level of stress that small business owners are experiencing, both in Chicago and across the country. According to the report, four in 10 (42 percent) Chicago small business owners cited that running their business is the most stressful aspect of their lives – more than four times as stressful as raising children (8 percent), and more than three times as stressful as maintaining a healthy relationship with their spouse or partner (13 percent) or managing their own personal finances (13 percent).
1 See "About the Bank of America Small Business Owner Report" section for information about survey methodology.
About the Bank of America Small Business Owner Report
Braun Research conducted the Bank of America Small Business Owner Report survey by phone between March 17 and April 9, 2012 on behalf of Bank of America. Braun contacted a nationally representative sample of 1,000 small business owners in the United States with annual revenue between $100,000 and $4,999,999 and employing between 2 and 99 employees. In addition, 300 small business owners were also surveyed in nine target markets including Atlanta Boston, Chicago Dallas, Los Angeles, Miami, New York, San Francisco and Washington, D.C. The margin of error for the national sample is +/- 3.1 percent, and +/- 5.7 percent for the oversampled markets, with both reported at a 95 percent confidence level.
Bank of America
Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 57 million consumer and small business relationships with approximately 5,700 retail banking offices and approximately 17,250 ATMs and award-winning online banking with 30 million active users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.
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The Braun Research survey results conducted on behalf of Bank of America and interpretations in this release are not intended, nor implied, to be a substitute for the professional advice received from a qualified accountant, attorney or financial advisor. Always seek the advice of an accountant, attorney or financial advisor with any questions you may have regarding the decisions you undertake as a result of reviewing the information contained herein. Nothing in this report should be construed as either advice or legal opinion.
© 2012 Bank of America Corporation. All rights reserved.
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Contacts:
Reporters May Contact:
Diane Wagner, Bank of America, 312.992.2370
diane.wagner@bankofamerica.com
