Study Finds That Consumer Spending, the Strength of the U.S. Dollar, the Effectiveness of U.S. Government Leaders and Commodities Prices Are All Top Concerns for Greater Washington 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 Greater Washington market, found that nearly half (48 percent) of small business owners are confident their local economy will improve in the next 12 months, while only one in three (34 percent) are confident the national economy will improve during that same time. Additionally, close to two-thirds (64 percent) cite the Greater Washington economy as important to the success of their business.
"Small businesses are the lifeblood of our economy and the fabric that holds our local community together," said Bill Couper, Mid-Atlantic president at Bank of America. "Greater Washington small businesses are a key driver of the civic activity that embodies this region. That's why it's so critical that we continue to find ways to partner with the public sector, other corporations and the general public to support the aspirations, sacrifices and ingenuity of the small business segment."
The survey found that Greater Washington small business owners have a number of specific concerns about the economy's impact on the success of their business, the greatest being the recovery of consumer spending (70 percent), closely followed by the strength of the U.S. dollar (68 percent), the effectiveness of U.S. government leaders (67 percent) and commodities prices (66 percent). Interestingly, the availability of credit was lower on the list of concerns (51 percent) compared to other issues that impact their business.
Despite these concerns, many small business owners in Greater Washington are optimistic about their own future. When asked to describe their staffing projections, nearly one-third (29 percent) of small business owners plan to hire more employees in the next year, and almost half (47 percent) plan to keep their staffing projections consistent. Additionally, over half (55 percent) of respondents anticipate seeing an increase in revenue over the next year. When asked to identify the most important action that they plan on taking to help generate this revenue, Greater Washington small business owners overwhelmingly cited marketing their business more to acquire new customers (48 percent) followed by providing better customer service (11 percent), obtaining additional capital to expand/grow their businesses (10 percent) and selling more to their existing customer base (10 percent).
Greater Washington small business owners set example as employee benefits provider
While one-third (32 percent) of Greater Washington small business owners admit to not providing any financial benefits to their employees, Greater Washington small business owners offer benefit packages more than other markets surveyed, or nationally, where two in five (44 percent) companies failed to provide benefits. Greater Washington small businesses offered SEP or Simple IRAs (17 percent), Flexible Spending Accounts (18 percent) and Health Savings Accounts (23 percent) to their employees, higher than the national response of 11 percent, 8 percent and 16 percent, respectively. Respondents also topped all other markets in Flexible Spending Accounts and Health Savings Accounts offerings. These benefits may have influenced staff retention, as Greater Washington small business owners had a lower employee turnover (14 percent) than nationally (18 percent) over the past 12 months.
However, competition with larger corporations to secure and retain top talent is a challenge. One in four (25 percent) Greater Washington small business owners cite their primary talent retention concern as providing competitive salaries, more than the national average (19 percent) and more than any other market surveyed in the report. Providing the extra perks of larger companies (16 percent), providing competitive health care and retirement benefits (16 percent) and finding employees with the skills required for their businesses (14 percent) are also top challenges facing the segment.
Greater Washington small business owners make personal sacrifices to achieve success
The positive outlook that many Greater Washington small business owners have comes at the expense of personal choices they're making in other areas of their lives, such as regularly forgoing free time (48 percent) and exercise (37 percent). These decisions may be contributing to the high level of anxiety that small business owners are experiencing, both in Greater Washington and across the country. According to the report, four in 10 (42 percent) Greater Washington small business owners cited that running their business is the most stressful aspect of their lives – more than three times as stressful as raising children (12 percent) and more than four times as stressful as maintaining a healthy relationship with their spouse or partner (9 percent) or managing their own personal finances (8 percent).
Greater Washington small business owners need more financial expertise
Less than three in 10 (27 percent) Greater Washington 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.Greater Washington 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, Greater Washington small business owners most frequently cited more customized services (15 percent) and an enhanced level of expertise (10 percent), while making it easier to get a loan (1 percent) ranked extremely low on their priority list.
"Bank of America recognizes the unique needs, obstacles and stresses of Greater Washington's small business owners," said Raj Kochhar, Small Business Banker region executive for the Mid-Atlantic. "Last year, as part of our commitment to hire 1,000 small business bankers across the country, we hired 75 small business bankers across the Mid-Atlantic region. These bankers serve as a dedicated resource to clients who need help addressing their complex cash, credit and deposit needs."
Bank of America has continued to actively lend to small businesses across the U.S. and the Greater Washington Area. In the first quarter of 2012, Bank of America extended $15.2 million in credit across Washington D.C. to businesses with less than $20 million in revenue. This number includes $5.2 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, 73 percent of Greater Washington 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 (39 percent), low profits/lack of business (25 percent) and not getting invoices out in a timely fashion (12 percent).
Of the 300 Greater Washington small business respondents, 39 percent have applied for a loan within the past two years and of those, 63 percent were approved.
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 Los Angeles, Dallas, Washington, D.C., Metro New York, Boston, Chicago, San Francisco, Atlanta and Miami. 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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