Twenty-eight percent of Chicago entrepreneurs plan to hire more employees in the year ahead — 6 percentage points above the national average and up 4 percentage points from spring 2017, according to the spring 2018 Bank of America Business Advantage Small Business Owner Report.
The report, based on a semiannual survey of 1,000 small business owners across the country and in the Chicagoland area, also found Chicago business owners’ confidence in their local economy held steady year over year, while confidence in the national economy declined slightly. This spring, 44 percent of entrepreneurs are confident the Chicago economy will improve in 2018, up 2 percentage points from spring 2017. Similarly, 43 percent of Chicago entrepreneurs are confident the national economy will improve in 2018 — down 4 percentage points from spring 2017 and 11 percentage points lower than the national average.
Meanwhile, though 53 percent of local entrepreneurs believe their revenue will increase in 2018, Chicago small business owners’ revenue expectations are 7 percentage points below the national average and the lowest among entrepreneurs surveyed in 10 major cities. In addition, 61 percent of Chicagoland small business owners plan to grow their business over the next five years, down 4 percentage points from a year ago.
“With confidence in the local economy holding steady, Chicago entrepreneurs are cautiously optimistic about the future as more plan to hire this spring and a majority anticipate long-term growth,” said Drew Piazza, Chicago small business banker manager for Bank of America. “Chicago’s small business owners are also embracing cutting-edge technologies and leveraging digital tools to continue innovating and cultivating a positive environment for business growth."
According to the report, Chicago entrepreneurs are split when it comes to the new tax code and its impact on small business. Forty-nine percent of Chicago business owners cite the new policy as a game-changer for small businesses overall, 9 percentage points lower than the national average. In addition, while 54 percent say it has made them more optimistic about their business outlook, this number trails the national average by 9 percentage points.
Only 39 percent of Chicago entrepreneurs have altered their business plans for 2018 as a result of the new tax code. Despite this, 70 percent of Chicago entrepreneurs expect to receive savings for their business because of the policy, and they plan to use these funds to fuel further growth, including:
Looking beyond the new tax policy, concern about other economic factors is on par with last year. Health care costs remain a top concern (69 percent) for entrepreneurs, while concern over other economic areas saw minimal increases since spring 2017, including:
Perhaps one of the most significant innovations disrupting the small business marketplace is in the digital payments space, with the majority of Chicago small businesses (56 percent) predicting all business payments will be transacted digitally within five years.
The report found that mobile use is nearly universal among local business owners, with 89 percent of Chicago entrepreneurs using smartphones and other mobile devices to manage their business, including:
Greater reliance on technology can also create challenges for Chicago entrepreneurs, as 52 percent believe their business would suffer if the internet crashed for a week, including 39 percent who say they would lose revenue and 26 percent who would lose customers. Eleven percent of local entrepreneurs say they have been impacted by a data breach in the last year, 3 percentage points higher than the national average.
Although the expanding role of new technologies presents some risks and challenges, Chicago business owners believe the positives far outweigh the negatives. A strong majority (81 percent) believe their future success is dependent on technology as opposed to being threatened by it (19 percent). Additionally, 82 percent of Chicago business owners make annual investments in technology, with 40 percent doing so at least once per quarter.
Chicago business owners are investing in emerging technology at a rapid pace, with half of survey respondents reporting they currently use or are actively exploring the use of advanced technologies for their business, including:
Chicago entrepreneurs are still hesitant about blockchain and cryptocurrencies. Fifty-four percent of Chicago business owners say they are unfamiliar with the distributed ledger technology, and only 18 percent believe it will be relevant to their business in the near future. In addition, only 27 percent of Chicago business owners anticipate accepting cryptocurrency in the next five years.
GfK Public Communications & Social Science conducted the Bank of America Small Business Owner Report Survey for spring 2018 online between February 12 and March 26, 2018 using a pre-recruited online sample of small business owners. GfK contacted a national sample of 1,031 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, Houston, 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.
Prior to 2016, previous 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 4,400 retail financial centers, approximately 16,000 ATMs, and award-winning digital banking with approximately 36 million active users, including approximately 25 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 across the United States, its territories and more than 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.
Reporters May Contact:
Diane Wagner, Bank of America, 312.992.2370