Tax Reform Ushers in Optimism, as Digital Payments and Emerging Technologies Create a Sense of Positivity in the Local Small Business Landscape
Miami entrepreneurs are extremely optimistic about 2018, with 62 percent expressing confidence in the local economy. This is the strongest local economic forecast recorded in Miami since spring 2016, and 6 percentage points higher than the national average. Additionally, 54 percent of Miami entrepreneurs predict the national economy will improve over the next year, up 2 percentage points from last spring, according to the spring 2018 Bank of America Business Advantage Small Business Owner Report.
The report, based on a semiannual survey of 1,000 small business owners across the country and in the greater Miami area, also found that 37 percent of Miami entrepreneurs plan to hire this year, 15 percentage points higher than the national average. In addition, 68 percent of local business owners expect their revenue to increase over the next 12 months — 8 percentage points higher than the national average.
Meanwhile, long-term plans to grow the business over the next five years (64 percent) dropped slightly from spring 2017 (71 percent). Additionally, 24 percent plan to apply for a loan in 2018 — Miami has consistently had the highest percentage of the 10 major cities surveyed over the past year.
“Miami entrepreneurs plan to expand their businesses, and optimism around revenue expectations, hiring and the local economy continues to outpace counterparts across the country,” said Odalis Martinez, Miami small business banker manager at Bank of America. “Miami small business owners are responding positively to recent tax reform and exploring the innovative ways digitization and advanced technology can foster growth for their business.”
According to the report, Miami small business owners are optimistic about tax reform. Fifty-seven percent cite the policy as a game-changer for small businesses overall, while 60 percent say it has made them more optimistic about their business outlook.
Furthermore, 51 percent of Miami entrepreneurs have altered their business plans for 2018 as a result of the new tax policy. Additionally, 78 percent expect to receive savings for their business because of the policy and they plan to use those funds to fuel further growth, including:
Investing back into their business (41 percent).
Awarding raises and bonuses to employees (21 percent).
Expanding operations (18 percent).
Hiring more employees (18 percent).
Despite the optimism surrounding the new tax policy, the survey also found there are several challenges anticipated for the year ahead in Miami. Health care costs remain the top economic concern of Miami business owners (66 percent, level from last year). The report also found a variety of economic concerns on the rise from last spring, including:
Consumer spending (56 percent, up 13 percentage points year over year).
Commodities pricing (54 percent, up 15 percentage points year over year).
Strength of U.S. dollar (53 percent, up 9 percentage points year over year).
Perhaps one of the most significant innovations disrupting the small business marketplace is in the digital payments space, with 68 percent of Miami small businesses predicting all business payments will be digital within five years — the highest among business owners surveyed in 10 major cities and significantly higher than the national average (52 percent).
The report also found that mobile use is nearly universal among small business owners across the country, with 95 percent of Miami entrepreneurs using smartphones and other mobile devices to manage their business, including:
Basic tasks (65 percent).
Digital banking (59 percent).
Social media updates (52 percent).
Digital payments (42 percent).
Two decades into the internet era, the role of the business website is less significant, as only 63 percent of Miami entrepreneurs report having a website. Fifty-four percent of business owners who have a website use it to share basic information, while 39 percent primarily use it to drive sales.
Greater reliance on technology can also create challenges for Miami entrepreneurs, as 63 percent believe their business would suffer if the internet crashed for a week, including 47 percent who say they would lose revenue and 37 percent who believe they would lose customers. Seventeen percent of Miami entrepreneurs say they have been impacted by a data breach in the last year, 9 percentage points higher than the national average.
Although there are some risks with the increasing role of new technologies in business, Miami small business owners believe the positives far outweigh the negatives, with 84 percent believing their future success is dependent on technology more so than threatened by it (16 percent). Additionally, 88 percent of Miami business owners make at least annual investments in technology, and 50 percent do so at least once per quarter.
Small business investment in emerging technology is advancing at a rapid pace in Miami, with 56 percent of survey respondents reporting they use or are currently exploring the use of advanced technologies for their business, 12 percentage points higher than the national average. The top technologies are:
Internet of things (29 percent).
Data mining/analytics (18 percent).
3D printing (11 percent).
Drones (9 percent).
However, Miami entrepreneurs say they still have a lot to learn about blockchain. Fifty-six percent of Miami business owners say they aren’t familiar with distributed ledger technology, while one-fourth believe it could be relevant to their business in the near future. That said, 37 percent of Miami entrepreneurs foresee accepting cryptocurrency within the next five years, the highest of the 10 markets surveyed and nearly double the national average (19 percent).
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:
Matthew Daily, Bank of America