As the year comes to a close, the majority of Los Angeles-area small business owners expect 2017 revenue to exceed that of 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 L.A. area, seven out of 10 L.A. entrepreneurs expect their revenue will increase over the next 12 months (19 percentage points higher than the national average). In the short term, L.A. business owners anticipate a strong finish to 2017, as 83 percent are confident that their year-end revenue will exceed that of 2016.
This confidence coincides with an increase in economic optimism since last fall. Forty-eight percent of L.A. entrepreneurs believe the national economy will improve over the next 12 months, an increase of 9 percentage points year over year. Similarly, 47 percent of L.A. small business owners believe their local economy will improve in year ahead, and they are planning to hire and expand at rates above their national peers:
Sixty-one percent plan to grow their business over the next five years (vs. 51 percent nationwide).
Twenty-eight percent intend to hire new employees in the next 12 months (vs. 16 percent nationwide).
Sixteen percent plan to apply for a loan in 2018 (vs. 8 percent nationwide).
“L.A. entrepreneurs anticipate a strong finish to the year, followed by a robust start to 2018,” said Troy Bosch, Los Angeles small business banker manager at Bank of America. “They’re feeling significantly more optimistic about the national economy, and over the next few months, they anticipate opportunities to hire and grow their bottom line.”
Concern about specific economic factors has held steady or significantly declined year over year. Health care costs continue to be the top economic concern, though at 61 percent, L.A. entrepreneurs are less concerned than last fall (72 percent). Other top economic concerns include:
Stock market (53 percent, steady since fall 2016).
Corporate tax rates (52 percent, steady since fall 2016).
Consumer spending (51 percent, down 14 percentage points since fall 2016).
Interest rates (47 percent, down 11 percentage points since fall 2016).
Strength of the U.S. dollar (44 percent, down 18 percentage points since fall 2016).
As the job market has tightened in recent years, business owners are increasingly focused on employee retention strategies. In L.A., 39 percent of business owners provide regular annual employee raises — the highest percentage among entrepreneurs nationwide, and 17 percentage points higher than the national average. To enhance company culture, seven out of 10 of L.A. entrepreneurs offer employee incentives.
L.A. entrepreneurs’ broader business growth strategies are also heavily rooted in employee development. Over the past two years, 39 percent of L.A. entrepreneurs have enacted employee training programs — 8 percentage points above the national average and the second-highest percentage nationwide. Another 39 percent have set out to fill business gaps by hiring skilled employees (vs. 24 percent nationwide), surpassing other growth strategies such as creating new products and services (35 percent), opening a new location (11 percent) and securing capital (10 percent).
Over the last two years, the most common goals for local business owners — apart from increasing revenue — were to meet customer and client expectations better (51 percent) and to improve the quality of their products and services (51 percent). To accomplish these missions, L.A. entrepreneurs are keeping their ears open, citing customer feedback as the number one factor helping them to achieve their business goals (45 percent).
When examining key contributors to success, L.A. small business owners described customer demand (92 percent) as the single most important factor contributing to the growth of their business. Other top factors include a positive economic environment (91 percent), favorable government policies (80 percent) and low taxes (76 percent).
Nearly half of L.A. small business owners believe social media has a positive impact on their bottom line. Fifty-seven percent of L.A. entrepreneurs rely on social media to sell their products (vs. 37 percent nationwide), and another 57 percent use it to capture customer feedback (vs. 39 percent nationwide). Additionally, L.A. entrepreneurs are using social media to market their business (70 percent) and network with their peers (69 percent) at a much greater level than their national counterparts (50 percent and 48 percent, respectively).
Just 7 percent of L.A. small business owners say social media has negatively affected their bottom line, but two out of five say they have made a business blunder on mobile or digital channels. Top business blunders among L.A. entrepreneurs include incorrectly scheduled appointments or meetings (15 percent), customer confusion due to outdated information found online (15 percent) and inaccurately processed payments (14 percent).
Beyond social media, the vast majority of L.A. business owners are adopting digital tools to assist in their day-to-day operations. Overall, nine out of 10 L.A. entrepreneurs use at least one digital tool to run their business, with digital banking (49 percent) and financial tracking and/or accounting apps (47 percent) reported as the most popular solutions.
As a result of higher revenue expectations for the year ahead, 86 percent of L.A. entrepreneurs plan to reward their employees with holiday-related perks, including:
Office closure during the holidays (48 percent).
Salary bonuses (41 percent).
Flexible hours and vacation time (39 percent).
Employee gifts (37 percent).
A holiday party (35 percent).
Additionally, three-quarters of L.A. entrepreneurs are participating in charitable efforts for this holiday season, such as making financial contributions to charities or nonprofits (47 percent), giving employees time off to volunteer (25 percent), and organizing charitable giving programs for employees and team volunteer opportunities (19 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.
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Reporters may contact:
Colleen Haggerty, Bank of America