Family and Friends Help Houston Small Business Owners Succeed, According to Bank of America Survey
Local Entrepreneurs Optimistic About the Future as They Plan to Hire and Grow
Houston small business owners rely on their friends and family for support more than their peers nationwide, according to the fall 2016 Bank of America Small Business Owner Report. Forty-eight percent of local small business owners say their friends and family help them the most when it comes to running their business, compared to the national average of 35 percent and highest among the 10 major cities surveyed. Houston-area entrepreneurs are also more likely to say their family is influential over their business decisions (52 percent vs. 39 percent nationwide).
The report, a semi-annual study exploring the concerns, aspirations and perspectives of small business owners in Houston and around the country, also found that at least one family member is involved in 72 percent of Houston small businesses, taking on the following roles:
Partner or co-owner (36 percent vs. 29 percent nationwide).
Employee (32 percent vs. 26 percent nationwide).
- Strategic advisor (20 percent vs. 9 percent nationwide).
“The support family and friends provide to local small business owners is admirable and key to their success,” said Elizabeth Romero, small business central division executive at Bank of America. “With the support of their loved ones, Houston entrepreneurs are planning to grow their businesses and are optimistic about the year ahead.”
Houstonians are appreciative of their family’s support with half reporting that the most important thing to them as a small business owner is providing for their family – the highest among all 10 cities surveyed.
Houston entrepreneurs planning for growth, confident in their local economy
Houston-area business owners are looking to the future. Over the next 12 months, 57 percent of local entrepreneurs expect their revenue to increase (vs. 52 percent nationwide). Their optimism extends to growth, as 61 percent plan to grow their business over the next five years – 6 percentage points higher than the national average – and 37 percent plan to hire.
To support their growth, 27 percent of Houston small business owners plan to apply for a loan in 2017, compared to only 10 percent of their national peers and more than any other city surveyed.
Houstonians’ positive outlook extends to their confidence in the economy. Two-thirds of local business owners expect their local economy to improve over the next 12 months, more than any other market surveyed and 29 percentage points higher than the national average. Conversely, they are the least confident in the national economy, with only 30 percent of Houston entrepreneurs expecting it to improve (vs. 31 percent nationwide and lower than any other city surveyed),
More likely to rely on banks, family and friends for funding
Compared to their national peers, Houston business owners are most likely to have launched their business with the help of a bank loan (35 percent vs. 25 percent nationwide). Additionally, they are more likely to have received startup funding from family and/or friends (29 percent vs. 21 percent nationwide), and less likely to have used personal savings (67 percent vs. 76 percent nationwide) to launch their business. If they could go back, 65 percent of Houston entrepreneurs would fund their business differently, 40 percentage points higher than the national average.
Now that their business is off the ground, Houston business owners have continued to use a mix of resources to fund their business, including:
Banks (55 percent vs. 43 percent nationwide).
Personal credit cards (31 percent vs. 42 percent nationwide).
- Family and/or friends (20 percent vs. 7 percent nationwide).
Of those who have borrowed from a family member or friend, 67 percent don’t regret asking. Instead, they feel more motivated to succeed (47 percent), but nearly one-third (32 percent) do feel pressure to pay it back.
Top economic concerns for Houston business owners: health care costs, interest rates and taxes
The top economic concern for Houston entrepreneurs is the cost of health care, with 81 percent worried it will impact their business over the next year – more than any other city surveyed. Other notable areas where Houston entrepreneurs are more concerned than their national peers are:
Interest rates (70 percent vs. 46 percent nationwide).
Corporate tax rates (59 percent vs. 49 percent nationwide).
- Credit availability (44 percent vs. 35 percent nationwide).
Houstonians most likely to reward employees during holidays; skeptical about Black Friday and Cyber Monday
With the holiday season approaching, most Houston small business owners (86 percent) say they plan to offer their employees holiday perks – more than any other city surveyed. The top three perks they plan to provide include:
Giving gifts to employees (51 percent vs. 27 percent nationwide).
Closing the office during the holidays (42 percent vs. 37 percent nationwide).
- Flexible hours or vacation time (36 percent vs. 20 percent nationwide).
Thirty-nine percent of Houston entrepreneurs say that offering holiday perks to their employees will not impact them, while 27 percent say they’ll need to work longer hours and 19 percent will need to sacrifice at least a portion of their own wage in order to pay for employee seasonal perks.
Only one-quarter of Houston entrepreneurs expect to receive a boost in sales from holiday spending, as 70 percent believe Black Friday is not important and 72 percent say the same about Cyber Monday. While they’re not relying heavily on popular commercial holiday shopping days to boost their bottom line, 68 percent expect to hit their year-end revenue goal.
EMV technology making Houston small business owners more secure
Only 16 percent of Houston small business owners have implemented Europay, MasterCard and Visa (EMV) technology into their business. Of these, 95 percent say they feel more secure compared to only 37 percent nationwide – more than any other market surveyed. For the 29 percent of Houston entrepreneurs who have not installed EMV, the top reason cited is they don't see the importance or value of implementing it.
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 Houston 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:
Britney Sheehan, Bank of America, 425.467.9744