Bank of America Survey Finds Boston Small Business Owners’ Economic Confidence Down
OREANDA-NEWS. Boston small business owners’ confidence in both the national economy and their business is on the decline this year, according to the spring 2016 Bank of America Small Business Owner Report, which found that only 33 percent feel confident that the national economy will improve over the next year – an 18 percentage-point drop from a year ago. The survey also found that the upcoming elections may be affecting their outlook, with 64 percent believing the presidential election will affect their business “a lot” or “somewhat,” and 44 percent saying the same about congressional elections.
The report, a semi-annual study exploring the concerns, aspirations and perspectives of small business owners in Boston and around the country, also found that outlook on business growth and hiring plans has slowed. While the majority (56 percent) plan to grow their business over the next five years, this projection is down from last year when 64 percent were planning to do so. Hiring projections have cooled as well, with only 23 percent of Boston entrepreneurs planning to hire new employees in 2016.
“Boston small business owners seem to be taking a wait-and-see approach to their business growth and hiring plans as the election year progresses, which is in line with past election year behaviors,” said Jonathan Dowst, regional executive at Bank of America. “Despite this, Boston small business owners continue to express confidence in their ability to grow their business.”
Boston small business owners express more confidence than their national counterparts when it comes to revenue expectations and their local economy. Fifty-seven percent of Boston entrepreneurs expect their revenue to increase this year ? higher than the national average of 51 percent. In addition, 46 percent anticipate their local economy will improve in the next year ? 8 percentage points higher than the national average.
Top economic factors impacting Boston small business owners
The top economic concern for Boston-area small business owners is the “effectiveness of U.S. government leaders” (80 percent), which has ranked as one of the top concerns in past election years. Among other economic factors, Boston small business owners worry most about rising health care costs (73 percent) and the U.S. and/or global stock market (61 percent).
The news isn’t entirely pessimistic, as Boston small business owners’ anxiety about several other economic factors has declined or remained flat since spring 2015: Concern over interest rates has dropped by 7 percentage points, while credit availability, corporate tax rates, the strength of the U.S. dollar, commodities prices and consumer spending have remained flat.
Boston entrepreneurs plan to invest loan funding in new equipment
Consistent with election year uncertainty, fewer entrepreneurs in Boston plan to apply for a loan this year, with only 9 percent reporting they intend to seek funding in 2016, compared with 20 percent last year. Of those who intend to apply for a loan, Boston small business owners are more likely to invest in new equipment than any other market surveyed (60 percent) – 26 percentage points higher than the national average. Other top reasons include hiring more employees (38 percent), investing in new technology (35 percent) and expanding operations (29 percent).
Skill and work experience top hiring factors; education less so
Nearly half (48 percent) report that skill level is the single most important factor when hiring, followed by previous work experience (28 percent) and fit with company culture (21 percent). Only 3 percent of Boston entrepreneurs say education level is the most important factor when hiring a job candidate.
In a ranking of qualities Boston entrepreneurs find most important for their employees to exhibit, 71 percent said they most value candidates who are hardworking, while trustworthiness ranks second at 67 percent. Additional top characteristics are experience (66 percent), logical thinking (50 percent) and problem solving (48 percent). Sales ability (23 percent), tech savvy (23 percent) and knowledge of STEM (science, technology, engineering and mathematics) (16 percent) are valued less.
Health care costs, minimum wage increase important issues for Boston entrepreneurs
Health care continues to loom prominently as an issue of importance for small business owners in Boston, with 73 percent concerned about rising costs. Fifty percent of Boston small business owners offer health insurance to their employees, 10 percentage points higher than their national counterparts. In addition, 50 percent of Boston small business owners report an increased health care cost of up to 20 percent since last year – 9 percentage points higher than the national average. Twenty-three percent say costs went up by more than 20 percent this year.
As Massachusetts prepares for its own minimum wage to rise to $11 per hour (effective January 1, 2017), 52 percent of Boston small business owners say they will need to take financial measures to compensate for the increase. Twenty-one percent say they will need to increase the price of products and services, followed by reducing operational spending (16 percent), cutting staff hours (7 percent) and cutting staff (6 percent).
For a complete, in-depth look at the insights of the nation’s small business owners, read the entire spring 2016 Bank of America Small Business Owner Report, and for additional insights, download the Small Business Owner Report national infographic.
About the Bank of America Small Business Owner Report
GfK Public Affairs and Corporate Communications conducted the spring 2016 Bank of America Small Business Owner Report survey online between March 17 and April 19, 2016 using a pre-recruited online sample of small business owners. GfK contacted a national 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, a total of 300 small business owners were also surveyed in nine target markets: Atlanta, Boston, Chicago, Dallas, Los Angeles, Miami, New York, San Francisco and Washington, D.C. The final results were weighted to national benchmark standards for size, revenue, and region. Previous waves of the Small Business Owner Report survey were conducted by telephone. Best efforts were made to replicate processes in sample, weighting, and method.
Bank of America
Bank of America is one of the world's leading 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 47 million consumer and small business relationships with approximately 4,700 retail financial centers, approximately 16,000 ATMs, and award-winning online banking with approximately 33 million active users and approximately 20 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 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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