Tax Reform Contributing to Entrepreneur Confidence as Technological Advancements and Digital Payments Poised to Reshape Small Business Landscape
Seven out of 10 Dallas/Fort Worth-area entrepreneurs plan to grow their business over the next five years, and 67 percent expect their revenue will increase in the next 12 months, according to the spring 2018 Bank of America Business Advantage Small Business Owner Report. However, 62 percent of Dallas/Fort Worth entrepreneurs still anticipate keeping the same amount of employees for the time being, illustrating a hopeful-but-cautious eye on the economy.
The report, based on a semiannual survey of 1,000 small business owners across the country and the greater Dallas/Fort Worth area, found that 69 percent of local entrepreneurs are confident the local economy will improve in 2018, holding steady from last spring. Similarly, 56 percent of Dallas/Fort Worth small business owners are confident their national economy will improve in 2018, steady year over year.
“Dallas/Fort Worth entrepreneurs are eager for growth and remain confident about the current economic climate,” said Ryan Parker, Dallas/Fort Worth small business banker manager at Bank of America. “They’re hopeful about recent changes to the federal tax code and believe that emerging technologies will encourage economic growth and ultimately transform the small business landscape.”
According to the report, one of the greatest opportunities for Dallas/Fort Worth small business owners in the near term may be recently enacted changes to the federal tax code. Sixty-two percent of local entrepreneurs cite the policy as a game-changer for small businesses overall, and 61 percent say it has made them more optimistic about their own business’ outlook.
Furthermore, 32 percent of Dallas/Fort Worth entrepreneurs say they have altered their business plans for 2018 as a result of the new tax code. Seventy-nine percent expect to receive savings for their business because of the policy, and they plan to use those funds to fuel further growth in different ways, including:
Investing back into their business (39 percent).
Expanding operations (20 percent).
Paying off a loan (18 percent).
Making capital improvements (16 percent).
Awarding raises and bonuses to employees (15 percent).
Despite optimism from the tax code changes, Dallas/Fort Worth business owners anticipate some economic challenges in the year ahead. Health care costs have remained the top economic concern since spring 2016, while other top economic concerns include:
Consumer spending (50 percent, steady year over year).
Interest rates (50 percent, up 9 percentage points year over year).
Strength of the U.S. dollar (48 percent, up 3 percentage points year over year).
Compliance with government regulation (44 percent, up 10 percentage points year over year).
Commodities prices (43 percent, down 5 percentage points year over year).
In exploring entrepreneurs’ adoption of certain technologies, the report found digital payments to be one of the most significant innovations disrupting the small business marketplace. Sixty-five percent predict all payments to small businesses will be digital within the next five years.
The report also found that mobile use is nearly universal among small business owners across the country, with 93 percent of Dallas/Fort Worth entrepreneurs using smartphones and other mobile devices to manage their business, including:
Basic tasks (78 percent).
Digital banking (56 percent).
Social media updates (49 percent).
Digital payments (40 percent).
Two decades into the internet era, the role of the business website remains less significant, as 55 percent of Dallas/Fort Worth entrepreneurs report having one. Fifty-three percent of business owners who have a website say its primary function is for sharing basic information, while 29 percent say its primary use is to drive sales.
Greater reliance on technology can also create challenges for entrepreneurs, as 46 percent of local business owners believe their business would suffer if the internet crashed for a week, including 35 percent who say they would lose revenue and 25 percent who would lose customers. Furthermore, 6 percent of Dallas/Fort Worth entrepreneurs say they have been impacted by a data breach in the last year.
Although there are some risks with the increasing role of new technologies in business, Dallas/Fort Worth small business owners believe the positives far outweigh the negatives, with 77 percent believing their future success is dependent on technology more so than threatened by it (23 percent). Additionally, 82 percent make at least annual investments in technology, and 40 percent do so at least once per quarter.
Small business investment in emerging technology is advancing at a rapid pace in Dallas/Fort Worth, with 53 percent of local respondents reporting they currently use or are exploring advanced technologies for their business, specifically:
Internet of things (25 percent).
Dallas/Fort Worth business owners still have a lot to learn about blockchain. Sixty-four percent say they aren’t familiar with distributed ledger technology, and only 16 percent believe it will be relevant to their business in the near future.
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:
Britney Sheehan, Bank of America