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Bank of America Survey Finds Majority of Bay Area Entrepreneurs Lean on Family, Friends and Community for Support

San Francisco Small Business Owners Optimistic on Economy, Revenue and Growth; Outlook Exceeds That of Most Peers Nationwide

Tuesday, November 15, 2016 9:00 am EST

Dateline:

San Francisco
"With entrepreneurism in their DNA, these business leaders are hoping to capitalize on what appears to be a stable economy, with plans to grow their business and hire more employees in the months ahead."

Eighty-one percent of Bay Area small business owners say they receive emotional, operational and/or financial support from their family, according to the fall 2016 Bank of America Small Business Owner Report. Fifty-one percent of local entrepreneurs also report that their family and/or friends have at some point loaned or gifted them money for their business.

The report, a semi-annual study exploring the concerns, aspirations and perspectives of small business owners in the Bay Area and around the country, also found that San Francisco small business owners aren’t taking for granted the financial support they receive from those closest to them. Eighty-one percent who have received money from family and/or friends say they need to repay the loan, and the top emotions Bay Area entrepreneurs feel when borrowing or receiving money from family and/or friends are grateful and appreciative (61 percent), anxiousness or pressure to pay it back (36 percent) and more motivated to succeed (35 percent).

“It’s uplifting to see Bay Area entrepreneurs receiving such strong emotional and financial support from their families and friends, and that the local community has played a critical role in their individual successes,” said Emily Shanks, small business northwest division executive at Bank of America. “With entrepreneurism in their DNA, these business leaders are hoping to capitalize on what appears to be a stable economy, with plans to grow their business and hire more employees in the months ahead.”

More than three-quarters of San Francisco small business owners report that residents in their community actively shop at small businesses – and 68 percent say the local community plays an important role in the success of their individual enterprise. Seventy-one percent of Bay Area entrepreneurs give back by supporting local charitable or nonprofit organizations.

A strong culture of community support may be why a majority of Bay Area small business owners have optimistic outlooks on the local economy, revenue and growth. Fifty-nine percent of the area’s small business owners expect their revenue to increase in the year ahead, compared to 52 percent nationally. Confidence in the economy is strong among Bay Area small business owners as well, with 55 percent reporting confidence in the local economy (vs. 37 percent nationwide) and 43 percent expressing confidence in the national economy (vs. 31 percent nationwide). San Francisco small business owners are among the most likely to hire more employees in 2017, with 43 percent planning to do so compared with 25 percent nationwide.

Top economic concerns among Bay Area entrepreneurs

When it comes to specific economic factors, health care costs are the most prominent concern among San Francisco entrepreneurs, with 69 percent reporting they are worried it will impact their business over the next year. Additional economic concerns that many San Francisco small business owners believe will impact their businesses in 2017 include:

 

  • Interest rates (57 percent).

  • Corporate tax rates (56 percent).

  • Strength of the U.S. dollar (54 percent).

  • Commodities prices (50 percent).

  • U.S. and/or global stock market (50 percent).

 

Life cycle of Bay Area small business financing

When asked how they initially funded their small business, a majority of Bay Area small business owners responded that they largely relied on personal savings (66 percent). Additional top startup funding sources used by San Francisco entrepreneurs include credit cards (42 percent), bank loans (34 percent) and family and/or friends (26 percent). On a much smaller scale, 16 percent of local entrepreneurs used alternative sources of funding when starting their business, such as crowdfunding, venture capital and angel investors.

Once their business is established, the top financing source cited by Bay Area small business owners shifts to bank loans (51 percent), while 40 percent use personal credit cards. There is less reliance on family and friends (14 percent), and financing with alternative sources (19 percent) remained steady.

Seventeen percent of small business owners in the Bay Area report they plan to apply for a loan in the next 12 months, up 5 percentage points from six months ago. Among those who intend to apply for a loan, 42 percent report they will use the funding to invest in new technology – the highest of 10 major cities surveyed and more than double the national average of 20 percent. Local small business owners also plan to use loan funding to invest in new equipment (33 percent) and to hire new employees (30 percent, more than twice as high as the national average of 13 percent).

Bay Area small business owners plan to finish strong in 2016, sacrifice to offer holiday perks

Seventy-seven percent of Bay Area small business owners plan to hit their year-end revenue goal, while 38 percent plan to generate more revenue this holiday season than they did in the 2015 holiday season.

Eighty-two percent of Bay Area small business owners plan to offer their employees at least one holiday perk, including:

  • Closing the office during the holidays (38 percent).

  • Giving gifts to employees (34 percent).

  • Holding an office holiday party (31 percent).

  • Offering flexible hours or vacation time around the holidays (31 percent).

  • Giving salary bonuses to employees (29 percent).

 

To make these perks possible, 56 percent of Bay Area small business owners say they will need to make a personal sacrifice in some way – 19 percentage points higher than the national average. Local entrepreneurs offering perks say they will be impacted by working longer hours (27 percent), sacrificing at least a portion of their own wage (21 percent), using their personal credit cards to pay for perks (17 percent) and/or forgoing vacation/days (13 percent).

For a complete, in-depth look at the insights of the nation’s small business owners, read the fall 2016 Bank of America Small Business Owner Report, and for additional insights, download the Small Business Owner Report national infographic here. A local San Francisco snapshot can also be viewed here.

 

About the Bank of America Small Business Owner Report
GfK Public Affairs and Corporate Communications conducted the Bank of America Small Business Owner Report survey for fall of 2016 online between August 7 and October 4, 2016 using 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, small business owners were surveyed in 10 target markets: Atlanta, Boston, Chicago, Dallas/Fort Worth, Houston, Los Angeles, Miami, New York, San Francisco and Washington, D.C. A total of 300 small business owners were surveyed in Atlanta, Boston, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, San Francisco and Washington, D.C., and 100 small business owners were surveyed in Houston. The final results were weighted to national benchmark standards for size, revenue and region.


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 4,600 retail financial centers, approximately 16,000 ATMs, and award-winning online banking with approximately 34 million active accounts and more than 21 million mobile active 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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Reporters May Contact:
Colleen Haggerty, Bank of America, 213.621.7414