Local Entrepreneurs’ Confidence in the Economy Holds Steady, but Pull Back on Hiring
Small business owners in the Greater Washington, D.C. area are among the most optimistic about business growth compared to their national counterparts, according to the spring 2017 Bank of America Small Business Owner Report. More than two-thirds plan to grow their business over the next five years (vs. 56 percent nationwide), and 65 percent forecast their revenue will increase over the next 12 months, 17 percentage points higher than the national average. This could be the result of recent revenue jumps as more than half report their revenue increased from 2015 to 2016—15 percentage points higher than the national average.
The report, based on a semi-annual study of small business owners in the Greater Washington area and across the country, also found that 58 percent are confident that their local economy will improve in the next year (vs. 50 percent nationwide), and nearly half said the same of the national economy (vs. 52 percent nationwide). However, confidence in both the local and national economies stayed steady since fall 2016—this is in contrast to the significant upticks in confidence from their peers nationwide.
Hiring is the only area that Greater Washington-area entrepreneurs are pulling back on. Only 25 percent of local small business owners plan to hire more employees over the next 12 months—a steep decline of 20 percentage points from just six months ago.
“Despite some concern about the national economy, Greater Washington-area business owners are bolstered by the local economy and are looking to the future as a result,” said Michael Bonura, Washington, D.C. small business banker manager at Bank of America. “We are excited to see these business owners planning for growth and confident about their revenue outlook in the year ahead.”
While local entrepreneurs are feeling more optimistic about the key areas of their business, they are concerned that certain economic factors could have an impact on their business over the next 12 months. Health care costs continue to be the most prominent concern among Greater Washington, D.C.-area small business owners, with 68 percent worried it will impact their business in the year ahead. Additionally, most local small business owners are concerned about:
Consumer spending (50 percent vs. 42 percent nationwide).
Corporate tax rates (47 percent vs. 39 percent nationwide).
While health care costs remain the top economic concern for local small business owners, they are more likely to believe that their business’ health care pricing, quality and availability have improved over the past five years compared to their national counterparts. Of the 37 percent of area entrepreneurs who contribute to employee insurance benefits:
Forty-five percent believe the pace of annual health care cost increases have improved (21 percent nationwide).
Forty-nine percent believe the quality of health care has improved (25 percent nationwide).
When asked about how they rate their level of enjoyment when running their business, 80 percent of local entrepreneurs said it’s high. Yet, 62 percent of Greater Washington, D.C.-area small business owners also reported high levels of stress and anxiety, compared with 53 percent nationwide. Despite this, 83 percent of local entrepreneurs say they have achieved a work-life balance, and nearly half say it has improved since starting their business. Only 14 percent of Washington, D.C. business owners say their work-life balance has worsened since starting their business—among the lowest reported of the 10 major cities surveyed.
Of the 17 percent who haven’t achieved a work-life balance, they reported the primary barriers to doing so are:
Customers requiring a lot of individual attention (67 percent vs. 44 percent nationwide).
Lacking the financial resources to hire additional staff so they complete tasks themselves (57 percent vs. 38 percent nationwide).
When asked to predict the future of small business 20 years from now, 57 percent of local business owners envision that more offices will be virtual—higher than any other market surveyed. Other top predictions include:
Businesses will go paperless (46 percent).
Cash will disappear with transactions becoming digital (32 percent).
Operations will conducted by automation (30 percent).
Hours of operations will be obsolete (22 percent).
Most businesses will employ a robot (11 percent)
Eighty-five percent of Greater Washington, D.C. small business owners say encouraging innovation in the workplace is a priority, and more than two-thirds consider themselves innovative business leaders. When comparing themselves to their industry peers, 42 percent believe they are ahead of the curve when it comes to innovation at their business—10 percentage points higher than the national average and more than any other market surveyed.
GfK Public Communications & Social Science conducted the Bank of America Business Advantage Small Business Owner Report for spring 2017 online between February 21 and March 19, 2017 using a pre-recruited online sample of small business owners. GfK contacted a national sample of 1,001 small business owners in the United States with annual revenue between $100,000 and $4,999,999 and employing between 2 and 99 employees. Additionally, a total of 300 small business owners were surveyed in 10 target markets: Atlanta, Boston, Chicago, Dallas/Fort Worth, Houston, Los Angeles, New York, Miami, San Francisco and Washington, D.C. An oversample of 150 interviews was also completed among respondents in the technology and medical/health care fields. The final results were weighted to national benchmark standards for size, revenue and region.
Waves of the Small Business Owner Report before 2016 were conducted by telephone, and while best efforts were made to replicate processes, differences in sample, weighting and method suggest caution when making direct statistical comparisons to results from previous years.
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 15,900 ATMs, and award-winning digital banking with approximately 35 million active users and more than 22 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.