Los Angeles Small Business Owners’ Confidence in Local and National Economies on the Rise, According to Bank of America Survey
Los Angeles Small Business Owners Planning to Hire and Grow Revenues More Than National Counterparts
Los Angeles small business owners are feeling more confident about the local and national economies than they were just six months ago and are more optimistic than their counterparts across the country, according to the fall 2016 Bank of America Small Business Owner Report.
The report, a semi-annual study exploring the concerns, aspirations and perspectives of small business owners in Los Angeles and around the country, found that 47 percent of Los Angeles entrepreneurs believe their local economy will improve over the next 12 months – a strong 7 percentage-point uptick from the spring and 10 percentage points higher than the national average (37 percent). Confidence in the national economy is also up – jumping from 29 percent in the spring to 39 percent this fall, which is 8 percentage points higher than the national average.
“Los Angeles small business owners are feeling more confident about the economy and showing signs of growth in their businesses, shaking off some of the uncertainty from earlier this year,” said Troy Bosch, Los Angeles small business banking manager at Bank of America. “In addition to their economic optimism, it’s encouraging to see that hiring plans are on the rise and revenue expectations are holding steady.”
Los Angeles entrepreneurs’ intent to hire is on the rise, while plans to grow and revenue expectations are holding steady and strong. Thirty-nine percent plan to hire more employees over the next 12 months, versus 33 percent in the spring and 25 percent nationwide. Sixty-seven percent plan to grow their business over the next five years, a small gain from 64 percent in the spring and significantly higher than 55 percent nationwide. Likewise, revenue expectations for Los Angeles small business owners are holding steady from the spring at 61 percent, which is 9 percentage points higher than the national average.
Economic factors and issues concerning Los Angeles small business owners
While Los Angeles entrepreneurs are more optimistic about the overall economy and key areas of their business, they are concerned that certain economic factors could have an impact. The most prominent economic concern among Los Angeles entrepreneurs is the cost of health care, with 72 percent worried it will impact their business over the next year. Sixty-five percent are also concerned about consumer spending compared to 51 percent nationwide and higher than all of the 10 major cities surveyed. Notably, Los Angeles small business owners are significantly more concerned about the following than the rest of the country:
Interest rates (58 percent vs. 46 percent nationwide).
Strength of the U.S. dollar (62 percent vs. 52 percent nationwide).
- Credit availability (44 percent vs. 35 percent nationwide).
Getting by with a little help from friends, families and local community
A strong majority (84 percent) of Los Angeles small business owners say they receive emotional, operational and/or financial support from their family. Fifty-four percent of local entrepreneurs also report that family and/or friends have at some point loaned or gifted them money for their business, and 48 percent rely on family and friends to serve at least one important role in their business, whether as advisors, employees, investors or partners. When asked who helps them most with running their business, 31 percent responded “friends and family,” exceeded only by “employees” (46 percent).
Additionally, 53 percent of Los Angeles entrepreneurs say their local community is important to the success of their small business – 6 percentage points higher than the national average. Los Angeles small business owners say their local community supports them most through:
Patronage of their business (37 percent).
Promotion and marketing of their business (25 percent).
- Online reviews and referrals (23 percent).
Of the 10 major cities surveyed, Los Angeles small business owners were the least likely to say they support charitable or nonprofit organizations in their community (60 percent) compared to the national average of 67 percent.
Funding sources for Los Angeles small businesses
To get their business off the ground, two-thirds of Los Angeles entrepreneurs say they dipped into their personal savings, while one-third used personal credit cards and 27 percent took out a bank loan. Nearly three in 10 Los Angeles small business owners turned to family and friends for a startup investment – 8 percentage points higher than the national average of 21 percent.
Once Los Angeles small businesses have been established, bank loans become the top source of capital (51 percent), followed by personal credit cards (36 percent), reducing family and friends as a source of funding to 15 percent. To a much smaller degree, business owners also report using new, alternative sources, such as online lenders, venture capital and angel investors.
Reluctant to embrace EMV technology
Only 27 percent of Los Angeles small business owners have implemented Europay, MasterCard and Visa (EMV) chip card technology. For the 31 percent who have not installed EMV, the top reason cited is they don't see the importance or value of implementing it (52 percent) – 7 percentage points higher than the national average. Among those who have adopted EMV, 59 percent say they feel more secure compared to only 37 percent nationwide who say the same.
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 Los Angeles 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:
Colleen Haggerty, Bank of America, 213.621.7414