As the year comes to a close, the majority of Boston-area small business owners expect 2017 revenue to exceed that of 2016, and they are projecting that growth to continue in the year ahead. According to the fall 2017 Bank of America Business Advantage Small Business Owner Report, a semiannual survey of 1,000 business owners across the country and the greater Boston area, more than four out of five Boston small business owners are confident that their 2017 year-end revenue will surpass their 2016 numbers, and two-thirds expect their revenue to increase over the next 12 months (15 percentage points above the national average).
This confidence in increasing revenues coincides with steady economic optimism that began among Boston entrepreneurs last fall. Forty-nine percent believe their local economy will improve over the next 12 months, and two out of five small business owners in Boston believe the national economy will improve, remaining steady from fall 2016. Looking ahead, Boston entrepreneurs are planning to hire and expand at significantly higher rates than their peers nationwide:
Sixty-two percent plan to grow their business over the next five years (vs. 51 percent nationwide).
Thirty-two percent intend to hire new employees over the next 12 months (vs. 16 percent nationwide).
Thirteen percent plan to apply for a loan in 2018 (vs. 8 percent nationwide).
“Looking ahead to 2018, Boston entrepreneurs see opportunities to grow their businesses and boost their bottom lines,” said Kevin Kelly, Northeast division executive at Bank of America. “Year-end revenue expectations are strong, and local small business owners are working to springboard off this momentum into a positive new year with plans to hire at double the rate of the national average.”
Health care costs continue to be the top economic concern among Boston entrepreneurs over the next 12 months as 69 percent expressed concern this fall, compared to 75 percent in fall 2016. Concern over many other economic factors has held steady or declined since last fall, including:
Stock market (54 percent, steady since fall 2016).
Strength of the U.S. dollar (53 percent, down 5 percentage points since fall 2016).
Interest rates (50 percent, down 7 percentage points since fall 2016).
Commodities prices (48 percent, down 14 percentage points since fall 2016).
Consumer spending (48 percent, down 13 percentage points since fall 2016).
However, Boston entrepreneurs are expressing more concern over corporate tax rates (53 percent in fall 2017 vs. 44 percent in fall 2016) and credit availability (41 percent in fall 2017 vs. 34 percent in fall 2016).
As the job market has tightened in recent years, business owners are increasingly focused on employee retention strategies. In Boston, 30 percent of business owners provide annual employee raises, 8 percentage points higher than the national average. To enhance company culture and retain quality employees, nearly three-quarters of Boston entrepreneurs have formed employee incentive programs.
Boston entrepreneurs’ broader business growth strategies are also heavily rooted in employee development. Over the past two years, 35 percent of Boston entrepreneurs have enacted employee training programs. Another 38 percent have set out to fill business gaps by hiring employees with a specific skill set (vs. 24 percent nationwide). Additional growth strategies that Boston entrepreneurs are pursuing include creating new products and services (42 percent), securing capital (14 percent) and opening a new location (11 percent).
Over the last two years, the most common goals for Boston small business owners — apart from increasing revenue — were to meet customer expectations (53 percent) and to improve the quality of their products and services (48 percent). To accomplish these missions, Boston entrepreneurs are keeping their ears perked, citing customer feedback as the number one factor helping them to achieve their business goals (51 percent).
When examining key contributors to success, Boston small business owners described customer demand (93 percent) as the single most important factor contributing to the growth of their business. Other top factors include a positive economic environment (88 percent), favorable government policies (80 percent) and the ability to attract and retain quality employees (77 percent).
More than two in five Boston small business owners believe social media has a positive impact on their bottom line. Fifty-six percent of Boston entrepreneurs rely on social media to offer promotions and share updates with their customers (vs. 41 percent nationwide), and another 55 percent use it to capture customer feedback (vs. 39 percent nationwide). Additionally, Boston entrepreneurs are using social media to market their business (61 percent) and network with their peers (64 percent) at a much greater level than their national counterparts (50 percent and 48 percent, respectively).
Just 4 percent of Boston small business owners say social media has negatively affected their bottom line, but two out of five say they have made a business blunder on mobile or digital channels. Top business blunders among Boston entrepreneurs include customer confusion due to outdated information found online (17 percent) and incorrectly scheduled appointments or meetings (15 percent).
Beyond social media, the vast majority of Boston business owners are adopting digital tools to assist in their day-to-day operations. Overall, 85 percent of Boston entrepreneurs use at least one digital tool to run their business, with digital banking (50 percent), online blogs and articles (38 percent) and financial tracking and/or accounting apps (37 percent) reported as the most popular tools.
Perhaps as a result of higher revenue expectations this year, 83 percent of Boston entrepreneurs plan to reward their employees with holiday-related perks, including:
Office closure during the holidays (47 percent).
Flexible hours and vacation time (43 percent).
Employee gifts (39 percent).
Salary bonuses (37 percent).
A holiday party (35 percent).
Additionally, seven out of 10 Boston entrepreneurs are participating in charitable efforts for this holiday season. Of business owners surveyed in 10 major cities across the U.S., Boston entrepreneurs are the most likely to make a financial contribution to charities or nonprofits (48 percent vs. 44 percent nationwide). Additionally, they’re organizing charitable giving programs for employees (22 percent) and team volunteer opportunities (17 percent).
GfK Public Communications & Social Science conducted the Bank of America Business Advantage Small Business Owner Report survey for fall of 2017 online between August 8 and September 28, 2017 using a pre-recruited online sample of small business owners. GfK contacted a national sample of 1,013 small business owners in the United States with annual revenue between $100,000 and $4,999,999 and employing between two and 99 employees. In addition, a total of approximately 300 small business owners were also surveyed in each of ten target markets: Atlanta, Boston, Chicago, Dallas/Fort Worth, Houston, Los Angeles, New York, Miami, San Francisco and Washington, D.C. Approximately 150 interviews each were also completed among respondents in the tech and medical/health care field. The final results were weighted to national benchmark standards for size, revenue and region.
Prior to 2016, waves of the Small Business Owner Report survey were conducted by telephone and while best efforts were made to replicate processes, differences in sample, weighting and method suggests caution when making direct statistical comparisons of the results from pre-2016 and post-2016.
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 4,500 retail financial centers, approximately 16,000 ATMs, and award-winning digital banking with approximately 34 million active users, including approximately 24 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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Reporters May Contact:
Trevor Koenig, Bank of America