Bank of America Survey Finds 64 Percent of Small Business Owners Are Still Recovering From the ‘Great Recession’
Despite Challenges, Small Business Owners Still Optimistic About the Future, Embrace Self-Sacrifice, Prioritize Employees and Customer Relationships
Seven years after the “Great Recession,” two-thirds (64 percent) of small business owners report their businesses are still in the process of recovering, according to Bank of America’s spring 2015 Small Business Owner Report. The report, based on a semi-annual survey of 1,000 small business owners across the country, says that only one in five (21 percent) small businesses state they have completely recovered from the recession.
However, despite these lingering impacts from the Great Recession, small business owners are still confident about the future growth of their businesses: 63 percent believe revenue will increase in the next 12 months (versus 62 percent last fall), and 66 percent plan to grow their business in the next five years.
“Small business owners are optimistic about the future and are working extremely hard to achieve success,” said Robb Hilson, Bank of America Small Business executive. “As they have focused on recovery, many business owners have embraced a mindset of self-sacrifice. They are prioritizing their employees and customers above all else and it is often at the expense of their own personal or financial well-being.”
The report found that small business owners have been working long hours, forgoing raises and delaying their own compensation as they focus on investing in employees and attracting and rewarding repeat customers.
The report also reveals that 67 percent of small business owners would rather delay or reduce their own compensation than take any other course of action to make ends meet. In fact, more than half (54 percent) of small business owners surveyed said they have either never given themselves a raise, or haven’t done so in more than two years. More women than men report having never given themselves a raise (23 percent of women, versus 15 percent of men).
In order to support their businesses, 85 percent of small business owners work more than 40 hours per week on average. Furthermore, 30 percent of respondents work more than 60 hours per week on average.
Small business owners continue to invest in their employees
When it comes to their employees, small business owners overwhelmingly find the need to reward them and show their appreciation in a variety of ways. Almost all (94 percent) small business owners surveyed say their companies have employee appreciation programs, including:
- Dinners and outings (46 percent).
- Spot bonuses (44 percent).
- Office recognition programs (35 percent).
- Extra time off (34 percent).
- Off-cycle raises or promotions (25 percent).
These are in addition to benefits programs, such as:
- Flexible hours (56 percent).
- Office closure on major holidays (48 percent).
- Paid vacation time (46 percent).
- Health care (37 percent).
Small business owners looking to hire but struggling to find skilled workers
The report found that 46 percent of small business owners plan to hire additional employees over the next 12 months, down from 52 percent a year ago. One potential reason for this decline is that more than two out of five small business owners (41 percent) are struggling to find qualified job candidates, according to the 2015 survey. They cite a number of challenges, including candidates who:
- Lack the skill sets they are seeking (59 percent).
- Have salary expectations that are too high (45 percent).
- Prefer to work for a large or midsize brand (29 percent).
- Want benefits they do not provide (26 percent).
As a result, rather than hiring new employees, small business owners are increasingly opting to train and develop existing personnel. Among individuals who plan to apply for a loan in 2015, 38 percent plan to use the funding for employee training and development, compared with 32 percent who plan to use the monies to hire new staff.
Small business owners strengthening relationships to attract and retain customers
Establishing relationships with customers is a primary driver of repeat business, and small business owners are showing their appreciation to their customers in a variety of ways. More than half (57 percent) of the survey respondents feel they receive repeat business because of the relationships they have developed with their customer base. This sentiment is even stronger among baby boomer owners (71 percent) compared with 47 percent of millennials and 53 percent of Gen-Xers.
The survey shows that some of the most popular ways owners are showing their appreciation to their customers are:
- Monetary rewards (29 percent).
- Events or celebrations (29 percent).
- Free product/service for a first visit (28 percent).
- Social media promotions (27 percent).
- Personalized gifts (27 percent).
- Referral programs (25 percent).
- Appreciation days (25 percent).
- Loyalty programs (24 percent).
Small business owners cite concerns over health care costs but remain optimistic about business growth
When asked about top concerns over various economic issues, small business owners once again cited health care costs as a top concern (70 percent) with the effectiveness of U.S. government leaders coming in as the second-highest concern (69 percent). Small business owners surveyed predict the greatest potential for a positive impact from government policies could come from:
- Expanded tax breaks for automatically enrolling employees in retirement savings accounts (36 percent).
- Incentives to keep jobs on U.S. soil (31 percent).
When asked which government policies would have the greatest negative impact on their businesses, small business owners cited:
- Required health care plans for employees (39 percent).
- Mandated sick leave for employees (29 percent).
- Increased minimum wage (26 percent).
Interestingly, while two in five small business owners believe required health care plans for employees would have the greatest negative impact on their businesses, another 23 percent believe they would have a positive impact.
When asked to rate how well they believe policy makers appreciate small business owners, there is a clear generational divide. More Gen-Xers (40 percent) and millennials (39 percent) are positive about policy makers appreciating small business, whereas only 14 percent of baby boomer business owners feel this way.
Local appreciation for small businesses seen across the country
National small business owners rate their local community high in shopping small, as 60 percent handed out an “A” or “B” grade when assessing how well their local communities frequent local small businesses. When looking at themselves, 63 percent of national small business owners gave themselves an “A” or “B” grade for shopping at other local small businesses.
The report also analyzed specific needs of small business owners in nine local markets across the country. Key insights gathered include:
- Like their national counterparts, most small business owners in certain markets are still recovering from the recession. Small business owners in Los Angeles (28 percent) and Miami (25 percent) are most likely to say their business has completely recovered, compared with New York (19 percent) and Boston (18 percent).
- Optimism about certain local economies follows a similar pattern, with Los Angeles (61 percent), Dallas (59 percent), Miami (59 percent) and San Francisco (61 percent) small business owners feeling that their local economy will improve over the next 12 months. A year ago, Los Angeles (53 percent) and New York (52 percent) small business owners had the highest rates of optimism about their local economies.
- Small business owners in some metropolitan areas, including Dallas (57 percent) and Miami (53 percent) said they are more likely to hire additional employees over the next 12 months, compared to New York (44 percent) and San Francisco (40 percent).
For a complete, in-depth look at the insights of the nation’s small business owners, read the entire spring 2015 Bank of America Small Business Owner Report and for additional insights, download the Small Business Owner Report national infographic here.
Bank of America Small Business Owner Report
Braun Research conducted the Bank of America Small Business Owner Report survey by phone, from March 4 through March 27, 2015, 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 each of nine target markets: Los Angeles, Dallas, Washington, D.C., New York, Boston, Chicago, San Francisco, Atlanta and Miami. The margin of error for the national sample is +/- 3.1 percent; the margin of error for the oversampled markets is +/ 5.7 percent, reported at a 95 percent confidence level.
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.
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 48 million consumer and small business relationships with approximately 4,800 retail financial centers and approximately 15,900 ATMs and award-winning online banking with 31 million active users and approximately 17 million mobile 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 3 million small 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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