Business Owners Attribute Growth to Hiring Employees With Specific Skills and Delivering New Products
As 2017 comes to a close, the majority of Chicago-area small business owners expect their year-end revenues to be higher than in 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 in the greater Chicago area, 73 percent of Chicago entrepreneurs are confident that their 2017 year-end revenue will exceed that of 2016. Meanwhile, 55 percent of area business owners are confident that their revenue will increase in the year ahead. While still a majority, this is a decline of 8 percentage points from last fall, when 63 percent foresaw increased revenue over the next 12 months.
Despite this minor decline in revenue expectations for 2018, Chicago entrepreneurs are increasingly optimistic about the economy. Forty-eight percent believe the national economy will improve over the next 12 months, an increase of 10 percentage points year over year. Similarly, 49 percent of Chicago small business owners believe their local economy will improve in the year ahead (up 5 percentage points from 2016), and they are planning to hire and expand at rates far above their peers across the country:
Sixty-two percent plan to grow their business over the next five years (vs. 51 percent nationwide).
Twenty-seven percent intend to hire new employees over the next 12 months (vs. 16 percent nationwide).
Sixteen percent plan to apply for a loan in 2018 (vs. 8 percent nationwide).
“In the year ahead, Chicago entrepreneurs are seeking access to capital and planning for long-term growth at rates far above the national average,” said Jim Holmes, Chicago small business banker manager for Bank of America. “Revenue expectations to close out 2017 are also strong, confidence in the economy surged from last fall, and small business hiring remains above the national average. This swell of confidence indicates a very promising year ahead for Chicago small business owners.”
Health care costs continue to be the chief economic concern among Chicago entrepreneurs, holding steady as 73 percent expressed anxiety over this issue in fall 2017 and fall 2016. Interestingly, concern over the strength of the U.S. dollar was the one economic factor that declined significantly year over year (44 percent in fall 2017, down 11 percentage points since fall 2016).
Concern about other economic factors has held steady since last fall, including:
Corporate tax rates (54 percent).
Consumer spending (52 percent).
Interest rates (47 percent).
Commodities prices (45 percent).
In Chicago, 32 percent of business owners hired employees with a specific skill set to help achieve their business goals and boost revenue in the past two years. Similarly, Chicago business owners are being thoughtful about retaining talent as 65 percent have taken steps within the past two years to do so — including offering flexible hours or work locations (45 percent), providing perks such as office happy hours (27 percent) and offering competitive benefits packages (18 percent). The majority of Chicago entrepreneurs provide wage increases and promotions, with most given on an unscheduled basis (50 percent) driven by either employee performance or positive business growth. Meanwhile, 29 percent give regular annual raises.
Hiring employees with a specific skill set has aided in the overall growth of Chicago small businesses, but finding the right talent has been a challenge. The inability to find and hire qualified employees is one of the top factors impeding Chicago business owners from achieving their business goals (41 percent), as well as personal issues and commitments outside of their business (53 percent) and ineffective marketing and promotion of their business (39 percent).
Over the last two years, the most common goal for Chicago business owners — apart from increasing revenue — was to improve the quality of products and/or services (46 percent), surpassing the national average by 10 percentage points (36 percent). In addition to improving the quality of products and/or services, Chicago small business owners also made it their goal to better meet customer expectations (42 percent). When examining key contributors to success, Chicago small business owners described customer demand (87 percent) and a positive economic environment (87 percent) as the most important factors contributing to the growth of their business.
Other top factors include the ability to attract and/or retain quality employees (73 percent), technological advances (70 percent) and favorable government policies toward small businesses (69 percent).
Forty percent of Chicago small business owners believe social media has had a positive impact on their bottom line. The top ways Chicago entrepreneurs are relying on social media are to research the marketplace and their competitors (64 percent) and to market their business (63 percent).
Just 5 percent of Chicago small business owners say social media has negatively affected their bottom line, but 45 percent say they have made a business blunder on mobile or digital channels — including customer confusion due to outdated information found online (20 percent) and incorrectly scheduled appointments or meetings (17 percent).
Beyond social media, the vast majority of Chicago business owners are adopting digital tools to assist in their day-to-day operations. Overall, 81 percent of Chicago entrepreneurs use at least one digital tool to run their business, including digital banking (47 percent) and business management apps (41 percent).
The majority of Chicago entrepreneurs plan to reward their employees with holiday-related perks, including:
Closing the office during the holidays (44 percent).
Salary bonuses (40 percent).
A holiday party (40 percent).
Employee gifts (35 percent).
Flexible hours and vacation time (33 percent).
Additionally, nearly two-thirds of Chicago entrepreneurs are participating in charitable efforts this holiday season, such as making financial contributions to charities or nonprofits (42 percent), organizing a fundraiser (18 percent), giving employees time off to volunteer (16 percent) and organizing charitable giving programs for employees (15 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.
# # #
Reporters may contact:
Diane Wagner, Bank of America