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 Boston market, found almost half (46 percent) of small business owners are confident the Boston economy will improve in the next 12 months, while only 39 percent are confident the national economy will improve in the next year. Additionally, seven in 10 (70 percent) survey respondents cite the local economy as important to the success of their business, more than any other market surveyed in the report.
“In many ways, New England is America’s birthplace of entrepreneurial innovation and development,” said Bob Gallery, Massachusetts president for Bank of America. “Bank of America is proud to support the city’s culture of small business ingenuity, and we will continue to find ways to provide the added level of expertise and counsel our clients need to navigate through today’s economic trials.”
The survey found that Boston small business owners have a number of specific concerns regarding the economy’s impact on the success of their business, the greatest being recovery of consumer spending (67 percent), followed closely by health care costs and the effectiveness of U.S. government leaders (both 65 percent). Interestingly, the availability of credit was lower on the list of concerns for Boston small business owners (52 percent).
Despite these concerns, many small business owners in Boston have expressed optimism about the future of their own business, with more than half (56 percent) of respondents anticipating an increase in revenue over the next 12 months. When asked to cite the most important action they plan on taking to help generate this revenue, Boston small business owners cite marketing their business in order to acquire new customers (38 percent), followed by maximizing day-to-day cash flow in order to invest in their business (18 percent) and selling more to their existing customer base (16 percent).
Boston small business owners make sacrifices to achieve success
Boston small business owners rank running a business as the most stressful aspect of their lives – another area where the local response (42 percent) was higher than in other parts of the country. In fact, respondents said running their business is more than three times as stressful as both raising children (12 percent) and maintaining healthy relationships with a spouse or partner (12 percent). The sacrifices that Boston small business owners make for the sake of their small business, such as time for themselves (45 percent), keeping physically fit (39 percent) and managing personal finances (19 percent) may contribute to this stress.
Boston small business owners’ concerns related to finding and maintaining talent
When asked to describe employee turnover over the past 12 months, only 17 percent of respondents saw turnover increase, with 70 percent citing that turnover remained consistent. Yet Boston small business owners feel that the greatest challenge they face as they look to retain top talent is finding employees with a good work ethic (22 percent), closely followed by offering competitive salaries (20 percent) and finding skilled workers (19 percent). Despite acknowledging the importance of attracting and retaining top candidates, 37 percent of Boston small business owners admit to not offering any type of financial benefits package to their employees, with only 23 percent offering their employees a 401(k) plan.
When asked to describe their staffing projections for the next year, 61 percent of Boston small business owners say they plan to maintain the same number of employees they currently have, while 19 percent plan to hire more employees over the next 12 months.
Boston small business owners need more financial expertise
Only 23 percent of Boston 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. Boston 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, one-fifth (20 percent) of respondents cite a desire for more investing options tailored to small businesses as well as better online/remote banking services (20 percent); 18 percent of Boston small business owners would like help marketing their business.
“We recognize the increasing appetite among small business owners for localized, hands-on support to grow and manage their businesses," said Raj Kochhar, Bank of America Small Business Banking region executive for the Northeast. “This report helps bring to light the challenges and opportunities for small business owners in the Boston area. We want to support small businesses in meeting both, which is why we’ve hired 50 small business bankers throughout New England who can offer personalized and local expertise.”
Bank of America has continued to actively lend to small businesses across the U.S. and Massachusetts. In the first quarter of 2012, Bank of America extended $164.3 million in credit across Massachusetts to businesses with less than $20 million in revenue. This number includes $53.5 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, 69 percent of Boston 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 cite not getting paid on time from customers (42 percent), low profits and lack of business (25 percent) and not invoicing customers in a timely manner (11 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 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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www.bankofamerica.com
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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